SABMiller Continues African Expansion
SABMiller will invest US$110mn into Nigeria, continuing its expansion into the African beer market. Nigeria offers fantastic potential, but competition from multinational breweries within the market is intense, and significant risks remain in the country.
The world's second largest brewer operates in Nigeria through a number of its subsidiaries, including Intafact Beverages, which sells Hero lager, one of the most popular beers in the country. The US$110mn investment will go into tripling the brewery's annual capacity from 700,000 to 2.1mn hectolitres, and will be operational from the first quarter of 2015.
Through its subsidiaries, SABMiller has the third largest share of the Nigerian beer market, behind Dutch company Heineken and the UK's Diageo. Heineken operates through the country's largest brewer, Nigerian Breweries, which in FY2012 had revenues of US$1.55bn. Nigerian Breweries holds about 57% of the country's beer market, marketing Star and Gulder lager, and more recently Heineken, which is considered a high end premium product within the country. Through Guinness Nigeria, Diageo holds about 26% of the country's beer market. Nigerian consumers are the largest drinkers of Guinness in the world, surpassing Ireland.
The consolidation of the Nigerian beer market by multinational brewers is microcosmic of Sub-Saharan Africa (SSA), demonstrating the massive potential that many countries within the continent hold. In SSA, Nigeria is a country that holds arguably the most promise, predominantly down to its large, youthful population. Currently, at less than 10 litres a year, per capita beer consumption is low, even by regional standards. There is massive scope for growth within the country, though competition is already intense among major brewers.
|Great Scope For Growth|
|Nigeria Beer Sales: Litres Per Capita & Total Value (NGNmn)|