Nigerian Breweries Plc, the largest brewer in the country, has announced its intention to acquire an 80 per cent stake in Distell Wines and Spirits Nigeria Limited, a subsidiary of Distell International Holdings Limited, which is owned by Heineken Beverages (Holdings) Limited. The deal also includes the import business of Heineken Beverages in Nigeria, as well as the licence to market, distribute and sell the imported products, and produce some of them locally.
The acquisition is subject to the approval of the shareholders of Nigerian Breweries, who will hold a general meeting next month in Lagos to consider and vote on the offer. The board of directors of Nigerian Breweries has recommended the deal to the shareholders, saying it aligns with the company’s strategic objective of expanding its product portfolio beyond beer to include wines, spirits and flavoured alcoholic beverages.
Distell Nigeria was established in 2018 and is involved in the local production of wines and ciders, such as Hunters, Savanna and 4th Street, as well as the importation of wines, spirits and flavoured alcoholic beverages, such as Amarula, Nederburg, Drostdy Hof, Klipdrift, Richelieu, Viceroy and Bain’s. The company has its headquarters in Lagos and operates a production facility in Ota, Ogun State.
The proposed acquisition comes at a time when the Nigerian alcoholic beverage market is facing challenges such as high inflation, low consumer spending, increased excise duties and competition from illicit products. According to Euromonitor International, the market declined by 8.8 per cent in volume and 3.5 per cent in value in 2022, compared to 2021. However, the market is expected to recover and grow by 4.2 per cent in volume and 10.4 per cent in value in 2023, driven by the recovery of the economy, the easing of COVID-19 restrictions and the increasing demand for premium and affordable products.
Nigerian Breweries, which is listed on the Nigerian Exchange Limited, has a market share of about 60 per cent in the beer segment, with brands such as Star, Heineken, Gulder, Goldberg, Life and Maltina. The company also produces non-alcoholic drinks, such as Amstel Malta, Fayrouz and Climax. The company reported a revenue of N337.01 billion and a profit after tax of N7.52 billion for the nine months ended September 30, 2023, representing an increase of 14.6 per cent and 22.9 per cent respectively, compared to the same period in 2022.
If the acquisition is successful, Nigerian Breweries will become a more diversified and competitive player in the Nigerian alcoholic beverage market, with a wider range of products to cater to different consumer preferences and occasions. The company will also benefit from the synergies and economies of scale that the deal will bring, as well as the opportunity to leverage the strong distribution network and brand equity of Distell Nigeria. The deal will also create value for the shareholders of Nigerian Breweries, who will enjoy higher returns and dividends in the long term.
Source: Business Day
