Economic Crisis: Nigerian Breweries Unveils The Latest Rates For Beers
Nigerian Breweries Plc has issued a new price review notification to all its customers in the West Zone.
The Nigerian Breweries PLC has issued a “Price Review Notification” to all its direct customers in the West Zone.
According to a letter sent to customers on Monday, February 12, 2024, that included this information.
The price adjustments, which take effect on Monday, February 19, 2024, are said to be required in order to counteract the effects of higher production costs.
Notwithstanding this, the company guaranteed that orders placed before the deadline and fully funded and registered in the system would be fulfilled at the current rates.
However, the updated pricing will apply to any orders that exceed the specified quantity window.
The FMCG company is reportedly reviewing its prices for the third time this year, according to insider sources.
“Please accept our best compliments! This is to inform you that we are constrained to review the prices of some of our SKUs with effect from Monday 19 February 2024. This review has become necessary because of continued rising input cost and the need to mitigate the impact.
“In appreciation of our great partnership and your commitment, we will deliver at current prices all open orders that are fully funded and created in our system before 00.00hrs on Monday 19th February 2024.”
“The exact quantity of orders that will be allowed will be communicated to you by your Regional Business Manager (RBM). Any order in excess of this quantity will be re-invoiced at the new price on the 19th of February 2024.
“While thanking you for your commitment to our valued partnership, be rest assured that we will continue to support your sales/distribution efforts as always. For further clarifications, please do not hesitate to contact your Regional Business Manager. Happy Selling!!! For. Nigerian.”
The move is a calculated reaction to the weight of economic challenges, especially the skyrocketing production costs driven by the December 2023 inflation rate of 28.92% and the Naira's depreciation of N1499.07 against the US dollar.
This action is in line with a precedent set in August 2023, when Nigerian Breweries raised the prices of a number of their products by a significant amount, starting on August 10, 2023.
Nigerian Breweries, a Heineken NV subsidiary, struggled in Q1 2023 with increasing loan amounts and losses from foreign exchange transactions.
Following a significant 274% increase in 2022, the net loss on foreign exchange transactions jumped by an alarming 680%, totaling N14.641 billion in Q1. These difficulties, when combined with higher interest costs, resulted in an after-tax loss of N10.72 billion for the company in Q1, which was its worst performance in the previous five quarters.
The profitability of Nigerian Breweries has been negatively impacted by ongoing losses on foreign exchange transactions and rising interest costs. The company's profit after tax increased by just 4.06% in 2022, suggesting a difficult year financially.
To make matters even more complicated, the Group reported a significant loss before tax in Q3 2023 of N10.319 billion, a significant increase of 56.24% over the N6.604 billion loss reported in the same period in September 2022.
This large loss was a major factor in the nine-month pre-tax loss, which came to N78.163 billion, as opposed to the N19.093 billion pre-tax profit that was reported in the same period of the prior year.
What consumers should take away from this
Customers will be burdened by Nigerian Breweries' recent price adjustments starting on February 19, 2024, making already difficult situations of tight disposable incomes and declining purchasing power even more difficult.
The increased costs might force customers to reconsider their choices, possibly directing them toward less expensive options.
This kind of situation could lead to a major change in the way people consume things, especially when it comes to beer. Changes in consumer preferences could potentially undermine long-standing brand loyalty in the industry as buyers look for more affordable options.
1. GULDER-N950
2. STAR-N850
3. 33 EXTRA-N850
4. HEINEKEN - N1300
5. LIFE-N850
6. LEGEND-N1250
7. TIGER-N750
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