Why is Nigerian Breweries Focusing on Spirits and Wines

Do you know that Nigeria’s economic landscape has presented formidable challenges for businesses across all sectors in recent years? The Manufacturing Association of Nigeria (MAN) highlighted a grim reality in 2023, with 767 manufacturing companies ceasing operations and 335 facing severe distress. 

The turbulence spared few, affecting even multinational corporations, leading to the exit of approximately five from the country last year. Amid such daunting challenges, Nigerian Breweries, a subsidiary of Heineken N.V., is charting a new course, aiming not only to survive but to thrive by expanding into the spirits and wines market.

Nigerian Breweries’ strategic move to navigate economic challenges 

Faced with an economy in flux, marked by a debilitating FX crisis that saw Nigerian Breweries experience its worst financial February in 15 years with a staggering loss of N106.3 billion in 2023, the company has taken decisive action. 

The acquisition of an 80% stake in Distell Wines & Spirits Nigeria Limited represents a pivotal shift from its traditional beer-centric model. This acquisition is not merely an expansion but a strategic diversification, meant to bolster resilience against future economic shocks and downturns.

How Nigerian Breweries is enhancing product diversity beyond beer

Historically known for its dominant position in the beer market, Nigerian Breweries has continuously explored ways to diversify its offerings. The introduction of non-alcoholic beverages like Fayrouz in 2006, followed by a variety of malt beverages, soft drinks, and energy drinks, has broadened its market reach. 

This foresight into diversification has allowed Nigerian Breweries to cater to a more extensive consumer base and stabilize its market presence amidst fluctuating economic conditions.

The Nigerian market has demonstrated a robust appetite for alcoholic beverages, with spending on alcoholic beverages by Nigerians reaching N2.18 trillion in 2022. While beer maintains a strong lead with a 55% market share, with spirits at 30% and wine at 15%. This trend, coupled with the rising demand for premium alcoholic beverages among urban consumers, provides a ripe opportunity for Nigerian Breweries to introduce their renowned quality and reliability into the wine and spirits sector. 

The shift towards premium alcoholic drinks has also increased the importation of luxury brands into Nigeria. This is because in 2022, Nigeria imported over $104 million worth of wine from the US, with substantial imports from France, South Africa, and Spain as well. 

This surge in demand has unfortunately also led to an increase in counterfeit alcoholic beverages in recent years. Nigerian Breweries can leverage its established brand reputation and extensive distribution network to seize a significant portion of this market. 

Additionally, Nigerian Breweries has solidified its status as a leader in the Nigerian alcoholic beverage sector, being the largest brewery in the country with a dominant market share of 60%.

The strategic acquisition of Distell positions Nigerian Breweries to capture this growing segment effectively, leveraging its vast distribution network and strong brand reputation to mitigate the risks associated with imported and counterfeit products.

What the future looks like

With the Nigerian Breweries/Distell deal set to conclude in the first half of the year, the future looks promising. Estimates suggest that wine consumption in Nigeria could reach 44.82 million liters by 2027, signaling a significant growth potential for Nigerian Breweries in this new venture. 

Through integrating spirits and wines into its portfolio, Nigerian Breweries is not just diversifying its product lineup but is also strategically positioning itself to tap into new consumer segments and drive long-term profitability.

The move by Nigerian Breweries to embrace the wine and spirits market is a testament to its adaptive strategy in the face of Nigeria’s challenging economic climate. This expansion into wines and spirits not only diversifies its product range but also aligns with the changing preferences of Nigerian consumers. 

According to data from Statista, wine consumption in Nigeria is projected to reach 44.82 million liters by 2027. This trend presents significant opportunities for Nigerian Breweries to expand and capitalize on the growing market.