Revenue growth from alcohol and drink consumption rose by over 53.8 percent in Q3 2021 according to Ripples Nigeria analysis, as Nigerians spent over N194.04 billion on products from the brewery industry in three months.
This amount was generated by the three market leaders, Nigerian Breweries, Guinness Nigeria and International Breweries, who had recorded N126.13 billion during the same period in 2020.
The increase in revenue was fueled by the full reopening of on-trade and off-trade business partners of the brewers, such as hotels, bars, restaurants, and supermarkets across the country.
However, despite the increase in consumer spending, only Nigerian Breweries and Guinness reported a combined profit after tax of N4.10 billion – N65.4 million and N4.04 billion respectively – in Q3 2021, while International Breweries reported loss of N11.3 billion.
During the corresponding period of Q3 2020, only Nigerian Breweries reported PAT of N83.91 million, while Guinness and International Breweries recorded N841.64 million and N3.71 billion loss respectively.
Breakdown of company performance
Nigerian Breweries generated N103.58 billion in Q3 this year, against the N68.65 billion reported during the same period between July to September 2020.
The firm’s management were able to hold down cost of production at N66.55 billion in Q3 2021, though it rose when compared to the N44.37 billion of Q3 last year.
Gross Profit for Guinness climbed to N37.02 billion in Q3 this year, surpassing the N24.27 billion recorded during the same period last year.
The second largest market shareholder earned N42.99 billion revenue from its consumers in Nigeria during the period under review, in contrast to the N25.26 billion it informed the public for Q3 2020.
Cost of sales, however, ate into International Breweries turnover after spending over N34.06 billion on production of its brands between July to September, higher than the N21.89 billion it cost the firm in Q3 2020.
International Breweries gross profit rose during the period this year to N8.93 billion, having recorded N3.36 billion during the corresponding period Q3 2020.
As its rivals, Guinness grew its revenue to N47.46 billion in the third quarter of this year, rising past the N30.02 billion reported for the same period in 2020.
The company’s management, however, couldn’t tame the rising cost of production which surpassed Q3 2020’s N23.01 billion, as Guinness spent N32.23 billion to have its products available in the market.
The cost of sales didn’t stop its gross profit from growing, as it settled at N15.23 billion in Q3 this year, in contrast to the N7.01 billion it recorded during the corresponding period Q3 2020.
Outlook of industry
The brewery industry is gradually recovering from an awful 2020, after COVID-19 pandemic induced lockdown threw a spanner in the works of the sector, which was just getting itself out of the grip of President Muhammadu Buhari’s tariff policy.
With hotels, bars and retailers fully reopening, and consumers readjusting to the aftermath of the lockdown on their purchasing power, revenue growth will remain slow, considering salary cut and unemployment rise resulting from businesses cost savings measure adopted during the lockdown.
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