‘Consumers no longer able to afford beer’ — Nigerian Breweries CEO speaks on FX crisis

Hans Essaadi, chief executive officer (CEO) of the Nigerian Breweries Plc, says the company is facing the worst downturn in the history of its operations in the West African nation.

Essaadi spoke in an investor call in Lagos on Monday, according to Bloomberg.

“It has been unprecedented year for our business in Nigeria,” he said.

“We saw a significant decline in the mainstream lager market as a result of Nigerian consumers no longer able to afford a Goldberg after a hard day’s work.”

Essaadi said the businesses also suffered huge losses because of the naira devaluation, which resulted in a N153 billion ($99 million) foreign exchange (FX) loss.

In its audited financial results for the period ended December 31, 2023, the firm also reported a net loss of N106 billion during the year. 

The beer maker said the loss was largely induced by the impact of the devaluation of the naira on its FX transactions. While the company also reported an operating profit of N44.5 billion in 2023, it is lower by 15 percent compared to the corresponding period in the previous year.

Since the floating of the naira by the Central Bank of Nigeria in June 2023, the local currency has lost nearly 70 percent of its value against the dollar, trading at N1,537.96/$1 on February 16, 2024 at the official window.

A the black market, the naira also hit a new all-time low of N1,730 on February 16, as inflation soars to almost 30 percent.

The brewer had announced an upward review in the prices of some products in its stock-keeping units (SKUs) to mitigate the impact of the rising cost of inputs.

The company said the price adjustments would take effect from February 19, 2024.

Further speaking at the investor call, Essaadi said he expects that the pressure on the firm’s operations will continue this year but long-term market fundamentals are still positive.

“Nigerian Breweries is very much committed to weathering the storm that we’re in the middle of,” he added.

He said he strongly believes the organisation has the right portfolio and the right process and the right people in place “to continue to win in this market”.