The impact of H1's economic environment on the Nigerian brewery industry
Key questions:
- Nigeria’s petrol subsidy removal, increasing inflation, and Foreign Exchange (FX) devaluation significantly affected company operations in the Nigerian Brewery Industry. How did these developments impact Nigerian Breweries PLC (NB PLC) and Guinness Nigeria PLC (GN PLC) in H1 2023?
- What strategies have brewery industry leaders implemented to adapt to the current economic environment?
NB PLC, the largest brewing company in Nigeria by revenue and asset size, ended last year on a resilient note.
Despite various cost pressures, NB PLC orchestrated a turnaround and recorded profits after tax of ₦13.19 billion in 2022.
Nonetheless, unforeseen challenges began to unfold as the calendar flipped to 2023. The first salvo was a cash crunch in Q1 2023 following the Central Bank of Nigeria’s (CBN) naira redesign policy, leading to low retail sales volume nationwide. The plot thickened in Q2 2023 when President Tinubu made an unprecedented announcement to remove Nigeria’s petrol subsidy that lasted almost half a century.
The petrol subsidy removal coincided with a surge in global crude oil prices, propelling the average petrol pump price upward by a staggering 163.2% from ₦238.11 in May 2023 to ₦626.70 in August 2023, as reflected in data published by the National Bureau of Statistics (NBS). The ensuing
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