A Huge Opportunity For Heineken
With annual sales of about US$1.55bn, Nigerian Breweries (NB) , the jewel in Dutch brewer Heineken 's African business, is the continent's largest beer company by revenue. NB is Nigeria's leading beer company by market share and is largely focused on premium beer, which we believe is an area where there is still a tremendous amount of growth to be realised over the next few years.
Unlike in East Africa, low-cost beer has not really caught on yet in most of West Africa - particularly in Nigeria. That said, UK-based multinational drinks firm SABMiller , a real pioneer here, is committing a lot of resources to Nigeria . This is coming from a low starting point given the long-standing dominance of NB and its main rival, Diageo's Guinness Nigeria. We see total beer sales in Nigeria reaching US$ 3.35bn in 2012 before growing at a compound annual rate of 17.3% to 2017 to reach US$7.4bn, which clearly underlines the level of opportunity.
|Dream Outlook For Heineken In Particular|
|Nigeria - Beer Value/Volume Sales|
The Middle East and Africa region currently accounts for about a quarter of Heineken's business , with Nigeria clearly head and shoulders above the other countries in this block as the standout opportunity. While the sensitivity of consumers to elevated food and fuel price inflation can weigh on spending as we saw in 2011, ultimately the fact that per capita beer consumption is still relatively low at about 10 litres suggests that there are significant opportunities for growth. We hold this view despite the fact that a very significant proportion of the population is Muslim and does not consume alcohol. However, for Heineken, the real opportunities will continue to come from premiumisation , in our view .