IT ISN’T THE DOLLAR RATE, NIGERIAN BREWERIES; PROLICIDAL MARKETING IS CHOKING YOUR BRANDS - By Ikem Okuhu.

NBP Brands assemble.

Let me start with a “definition of concept” as often used by researchers, and the only thing I am going to define here is the word, “prolicide, as can be gleaned from the adjective in the headline. Prolicide is the type of crime in which a parent, for one reason or the other, intentionally or accidentally, causes the death of his or her own children. Having done this, I will quickly move to state that unlike what the market is being led to believe, Nigerian Breweries Plc has not done all that should be done to protect the brands in its portfolio, and that has been chiefly why their numbers have been abysmally unimpressive over the last few years.

Let me state that I almost did not do this story. Following the feedback from a story I published here on November 21, 2023, titled, ABOBAKU BRANDING: DEAR GOLDBERG BLACK, TROPHY IS FAILING, NOT JUST BECAUSE IT WAS CALLED A “STOUT”, I felt that doing a follow-up so soon after was bound to raise the typical Nigerian outcry of, “Oh, he has been paid to run us down,” but after reflecting on a few things, including what I stood for when I was still actively covering the Nigerian marketing and communications space, the decision to go ahead was pretty easy.

In reaction to the last article I published on NB Plc, I had a few people reaching out, suggesting I was a bit hard on the brand, but when I asked of how they would have painted the story differently were they the ones in front of the laptop, I could not get any approach that was markedly different. Gladly, there were legions of other concerned players in the industry who encouraged me to conduct a little more research to unravel just how deep in the hole the company is, and how much of the festering wounds afflicting nearly all the money-making brands have been self-inflicted.

On October 27, 2023, the media was awash with reports of the 9-months performance of the Nigerian Breweries Plc. I scanned all the media publications and noted the effort to play mind games with the market by highlighting the topline while playing down on the bottomline. In this report, which is available all over the internet, Nigerian Breweries made a loss (after tax) of N57 billion for the period, January to September, 2023.

N57 billion!!

ll we need to do is divide the projected industry revenue by among the three major brewers. This will give us a staggering N1.38 billion, and thus we have to ask what happened to the differential of N984 billion, which should have been harvested by Nigerian breweries, that is assuming that the three major brewers have equal market share?

That’s quite a dizzying number that should have made shareholders and bankers asking questions. Even the general public has not been provoked to ask the important questions, and I think that has been so because the numbers that should have provoked the questions were cleverly hidden from immediate view. In more that 10 of the news items I read online about this abysmal report card, the bottomline was mentioned in the last paragraph. As a former employee in two of Nigeria’s major banks, I am aware that most times, when results are not impressive, the resort to topline reporting becomes conveniently favoured.

But even the topline of Nigerian Breweries is frightening. As much as this was diluted with the blame that was squarely placed on the rising dollar rates and the Siamese hyper-inflation ravaging this county, the 2 percent marginal increase in gross revenue, from N402 billion in 2023, to N393 billion for the equivalent period in 2022 should be of concern to many people, especially when looked at the double figure drop in bottomline recorded.

NB’s Company Secretary, Uaboi Agbebaku, who signed the statement, made a tacit admission that I am sure was missed by many readers. Agbebaku said although there was an increase in revenue for the period, sales volume declined, and this blame was placed on the drop in the disposable income of Nigerians.

This does not look like the whole truth. A marginal increase of 2% in revenue can not 23% drop in profit after tax. Except there is acknowledgement of severe wastages in production and marketing costs. While I do not know a lot about the cost of production, I do know that investments in the production and marketing of brands like the Goldberg Black, the subject of my last story, constitute significant drains. In addition to this, the market itself has telltales of evidence that contrary to what was made-believe, the challenge faced by Nigerian Breweries wasn’t so industry-wide.

Earlier in the year, it was reported by Statista that the Nigerian beer market was expected to grow by 11.9 percent between 2023 and 2027, with revenue in the north of $5.3 billion (equivalent to N4.16 trillion. Statista, in this report, also stated that the beer market in the country was going to grow by 11.9 percent during the year. The question is, what impeded the growth of Nigerian Breweries.

There are three major brewers in the country; Nigerian Breweries, Guinness Nigerian Plc. and the AB Inbev group. To let us understand precarious situation Nigerian Breweries is in its business in the country is quite easy; all we need to do is divide the projected industry revenue by among the three major brewers. This will give us a staggering N1.38 billion, and thus we have to ask what happened to the differential of N984 billion, which should have been harvested by Nigerian breweries, that is assuming that the three major brewers have equal market share?

First, the sad news of the imperilled situation this company stands in the market needs to be revealed; Nigerian Breweries has significantly yielded its leadership of the Nigerian beer market. From a comfortable dominant market share of 60 percent just a year ago, this giant has lost a lot of grounds and is currently estimated to control 43 percent of the market.
We were informed that the company’s number one distributor, whose name was given as Ken Maduakor, for one reason or the other, was allowed to leave. Messrs. Maduakor, we were informed, was in responsible for lifting more than 30% of all Nigeria Breweries production volume per annum, and sometimes, pays for these huge volumes upfront. Maduakor now does business with AB Inbev, a situation which might be a major reason for the drop in performance.

At the risk of sounding patronizing, I will state that most of these grounds have been yielded to rival AB Inbev, which has unleashed its regional fighting army of brands against NB brands with measurable commercial successes. And these numbers are not hidden. In the southeast, a market that I have in several articles, described as Nigeria’s beer capital, Life Lager Beer is taking a beating in the hands of AB Inbev’s Hero Lager. In the Southwest, you’d only need to visit a few bars to know, as I do, that AB Inbev’s Trophy is dealing with NB’s Goldberg. At the premium segment, it is not good tidings for both NB’s Heineken and AB Inbev’s Budweiser, and that might be because of the arid nature of the entire segment as a result of the difficult economic situation.

Owing to the confusion arising from the inconsistencies and lack of creativity in brand DNA, Gulder has also flagged and has refused to emerge from the spell cast by the Gulder Max extension and the pall that arose from exit of the Gulder Ultimate Search. It is difficult to define the Gulder brand these days, what with the attempts to associate Cubana Chief Priest, a man who owns another alcoholic beverage, with the brand.

What of the malt segment? Well, I rarely drink malt, but if you ask most of the stockists, across the regions, you’d find that Better Malt, Grand Malt and Malta Guinness are ruling the market in the various regions. Maltina not in the number.

So why is Nigerian Breweries bleeding? What factors have been responsible for the erosion of nearly every performance indicator? We will provide the reasons in the following paragraphs>

Loss of major distributor to competition: Our search for the reasons behind the poor results posted by Nigerian Breweries revealed that poor relationship management with most of its major upper-echelon stakeholders have breached its supply chain, leading to weakened brand presence in the market. It was discovered during our search that Nigerian Breweries has lost of its top distributors, whose destination has been at AB Inbev. We were informed that the company’s number one distributor, whose name was given as Ken Maduakor, for one reason or the other, was allowed to leave. Messrs. Maduakor, we were informed, was in responsible for lifting more than 30% of all Nigeria Breweries production volume per annum, and sometimes, pays for these huge volumes upfront. Maduakor now does business with AB Inbev, a situation which might be a major reason for the drop in performance.

Expensive marketing costs: Nigerian Breweries have been known to embark on ridiculously expensive marketing expeditions that end up destroying rather than building the brand. There is a cemetery filled with examples of many of these futile ventures and I have written about many of them in the past. Line extensions have cost this company a lot – the extension of Star, Gulder Max and even Maltina – contributed to a slow but steady brand erosion that caused the flight of many from their hitherto favourite brands. I remember the billions that went into a relaunch of Star Lager in which Burna Boy and a few artists were hired as brand ambassadors. I still remember that when I heard this announcement, which took place sometime in 2019, I made the point to write about why Burna Boy wasn’t the right person for the brand. I even recommended Whiz Kid, particularly because he was already well-known by the moniker, Star Boy, meaning that the been would easily become a part of his brand. Today, I do not know where Burna Boy, with his multiple Grammys and record sales, has taken this beer brand. I will still talk about Gulder where social conformity was allowed to prevail over brand personality considerations, leading to the anointing of Toke Makinwa to anchor the last Gulder Ultimate Search. Gulder is unpretentiously masculine. Toke was therefore a strategic misfit, and this was not lost on the owners of the Gulder brand, and by this, I mean the consumers.

Adulteration and the general lack of care: If you sit around beer drinkers for 10 hours, chances are that they will take at least an hour to talk about adulterated beers. Once you see a beer drinker pouring libation, bottle after bottle, know that the person is no longer sure of the quality of what he is drinking. I am not sure it is for me to mention places where I have heard much of these adulterations take place, particularly in Lagos and the Southeast, but it is quite obvious what these adulterations do to the brand – it tampers with the pleasure of brand consumption; it creates a feeling of suspicion between the brand and the consumer, and ultimately leads to a flight away to a relatively safer alternative. I doubt if the company has invested enough in locating, exposing and dealing with the people who counterfeit many of the Nigerian Breweries’ brands. If this company would invest one-tenth of what it wastes in futile marketing activities in protecting its brands and reassuring its consumers, I do not believe the numbers would be in this abysmal steep southward gradient.