Nigerian Breweries moves to Source materials locally to overcome forex challenges

Nigerian Breweries Plc has expressed its readiness to source for raw materials locally as well as seek further improvements in its sorghum value-chain in a bid to forestall a future reoccurrence of the foreign exchange challenges it faced during the 2016 financial year.

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The brewery giant added that it would be solidifying its earnings and profitability through improved market penetration with its innovative products, adding that it would examine its price adjustment mechanism to ensure a balance in the management of input costs and the prices consumers are willing to pay for its products.

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Addressing newsmen ahead of the company’s Annual General Meeting (AGM), the Managing Director of Nigerian Breweries Plc, Nicolaas Vervelde, mentioned that the company is making progress with its partners – International Fertilizer Development Centre (IFDC), and Psaltry International, a local processing firm, on improving value extraction from cassava.

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The MD added that the company was making progressing in the development of new hybrid sorghum varieties, noting that yields have increased over the period which is in line with the firm’s growth projection.

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It is expected that economic activities will improve in 2017 considering the far reaching fiscal and monetary measures being planned and implemented by the Federal Government. It is therefore anticipated that with the gradual rise in the price of oil and a steady increase in the volume of oil output, the Naira will be strengthened and forex will be more available for businesses.

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The brewed product market would remain competitive and consumers are expected to continue the down-trading as they seek for more affordable brands. Cost leadership and market leadership supported by innovation remain our key strategic pillars,Vervelde said.

He further said that there was a 25% increase in the cost of goods sold in the previous year due to higher input costs. However, results from operating activities increased by 7%, while profit after tax grew 9%, driven by lower net finance charges and a continued focus on its cost efficiencies.

Vervelde further disclosed that revenue in the period rose 18% due to the impact of price adjustments it implemented in 2016 which was necessitated as a result of the effect of higher inflation and depreciation of the naira on production costs. He further added that Nigerian Breweries has developed a set of competing portfolio to address the needs of a diverse consumer base, even as he decried the low per capita consumption of beer in the country.

He said that Nigeria with a population of 170 million people consumes only 11-litres per person a year, while other countries with large population have far higher consumption per capita.

He added that the state of the country’s economy in 2016 reflected on the performance of the brewery industry.

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