Why Nigerian Breweries Considers Increasing Price of Products
Nigerian Breweries Plc is considering increasing prices of certain brands, which were not named, in a bid to reflect the increase of excise duties announced last year by the President Muhammadu Buhari-led administration.
Excise duty make up 7.5% of Nigerian Breweries’gross revenue, thereby impacting the company’s net revenue which declined by 5.8% in 2018. The company recorded N324.4 billion in 2018, dropping from N344.5 billion in 2017. Its gross profit also fell by 11.6% to N126.9 billion from N143.5 billion in 2017.
The Nigerian Government had increased excise duties on beer and Stout by N0.30 kobo per centiliter (Cl) in 2018 and N0.35 kobo per Cl each in 2019 and 2020.
The decision was prompted by the need to achieve a dual benefit of raising the Government’s fiscal revenues and reducing the health hazards associated with tobacco-consumption and alcohol abuse.
The company is looking to record a better result in 2019. One of the ways to achieve this is to increase the price of certain products since the excise duties will increase this year rather than decrease.
The company had taken this path before, but backtracked after studying the reactions of its customers. It needed to remain competitive in the market.
The Chief Executive Officer and Managing Director of Nigerian Breweries, Jordi Borrut Bel, told newsmen that the company doesn’t intend to place the burden on the company’s diverse consumers. He further stated that the company could consider selling more revenue-driving brands.
The CEO assured that harsh decision on a broad perspective will not be made in order to remain competitive in the market.
Culled from Nairametrics