The Beverages Industry in Nigeria 2023

Challenges

Multiple taxes. Power shortages and outages. A volatile local currency. Bureaucracy and corruption. Delays in distribution because of poor roads. High distribution costs. High energy and fuel costs High inflation rate. High raw material costs. Insecurity situation particularly in the north of the country. Lack of skilled technicians. Poor infrastructure (roads, transport). Shortage of foreign exchange.

Introduction

Nigeria’s beverage industry is dominated by a few big companies that are controlled by multinational companies either as subsidiaries or through shareholding. Competition in the beverages sector is high among the major operators. The informal market is characterised by a sizeable number of microbrewers, back yard distillers, and informal and semi-informal traders. Demand for beverages is being driven by the growing population, rising middle class and rapid urbanisation. The continuous depreciation of the local currency, shortage of foreign currency, high cost of raw materials and inflation continue to present operational challenges to the industry.

Opportunities

Expansion of production capacity investment is ongoing. Investment in green energy to cut energy costs. Large and growing population. Multinational market leaders well represented through local subsidiaries. Raw materials farming such as maize and sorghum. Rising demand for premium products such as spirits and wines. Rising urbanisation and growing middle class. The Nigerian beverage industry is well established compared to other local industries.

Outlook

Nigeria’s budget deficit, which is expected to be funded by local borrowing, has the potential to limit funds available to businesses for investment purposes. The removal of the fuel subsidy has depressed consumer purchasing power, and spending on alcohol, as energy, food, transport and import costs rise. General consumption demand growth of less than 3% is expected in 2024, similar to 2023. The beverage industry is managing operational costs and focusing on product innovation to cater for different market segments. Continuous investments in green energy will reduce energy costs and production disruptions when the national grid is down.

Report Coverage

This report focuses on Nigeria’s beverage industry, which includes the manufacture, wholesale and retail of alcoholic and non-alcoholic beverages. It includes information on production and consumption, major players and their brands, key trends and issues, corporate actions and influencing factors such as input costs and illegal brewing and trade. There are profiles of 36 companies including local operations of major international companies such as Cadbury, Seven-Up Bottling, Guinness Nigeria and Nigerian Bottling Company, wholesalers such as Wigmore trading, local producers such as Stellar Beverages and Nigeria Distilleries, retailers such as Ace Supermarkets and online players including Party Drinks (Drinks.

ng)Trends

Alcoholic beverages growth is being fuelled by the fast rate of urbanisation, and a large and growing young population. Brewers are focusing on pricing to drive revenues. Increasing adoption of alternative technologies to reduce energy consumption and emission. Increasing demand for premium brands. Middle class are becoming more brand conscious and interested in new premium products. New product launches, marketing activities and improvement in distribution. Price reduction and volume increase per bottle strategy being used by new entrants to penetrate the market. Rising health awareness among consumers is driving growth for fruit juices and bottled water. The increase in ecommerce platforms.