Investment Thesis: Heineken Rules Beer Industry in Nigeria

Nigeria is the second-largest beer market in Africa, after South Africa. Beer is the most popular alcoholic drink in Nigeria, ac- counting for 96 percent of all alcoholic sales. The Nigerian brewery industry is dominated by two heavyweights: Heineken and Diageo. 
Bismarck Rewane, chief executive officer of Financial Derivatives (FDC) Limited said Heineken has two subsidiaries which give it 70 percent market share NB Plc contributing 60 percent and Consolidated Breweries, 10 percent. Diageo has a stake in Guinness Nigeria which has a 25 percent market share. 
One of the new entrants in the market is South African Breweries Miller (SABM) which is performing well since its entry in 2009.
NB Plc has an estimated combined annual capacity of 13.5 million hectoliter (hl) at its five breweries located across the country. Guinness operates four breweries, and with its current expansion the estimated capacity will be about 7.5mn hl by 2014.
SABM has a capacity of 1.8mn hl. Being a new entrant it has built up its capacity largely by making acquisitions and is focusing at offering beer at comparatively lower prices. Nigeria has the largest population of all African countries. A growing middle class and a large number of drinking-age consumers with increasing disposable incomes is expected to drive beer consumption, leading to estimates that the Nigerian beer market will grow at an average of eight percent  over the next five years. In recent times the discretionary income of consumers has come under pressure given higher expenditures on amenities such as food, transportation and accommodation which have led to a high cost of living.

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