With the completion of the Distell Nigeria acquisition by Nigerian Breweries Plc, stakeholders in the food and drinks industry expect a boost to the economy and another opportunity for the brewery giant to further consolidate its market leadership
Perhaps the major news in the marketplace now is how the recent acquisition of a majority stake of 80 percent in Distell Wines and Spirits Nigeria Limited by Nigerian Breweries would strengthen the economy and impact the company's overall business.
Of course, the development has also thrown up critical questions because of the strategic importance of acquisition to businesses. To this end, a section of the market is wondering if the decision was taken to improve the struggling business of the brewery giant. "There is no gainsaying the fact that many businesses are going through their underperforming phases and acquisition may be a solution for Nigerian Breweries," a member of the Nigerian Institute of Public Relations, Mustapha Chonoko said.
Another perspective is whether the acquisition is an important way to help the business thrive, as the 'conquest' may allow NB to join forces to obtain more funds for development.
But findings have since revealed that the two major reasons behind the acquisition are; business diversification and passion for consumers. It is also an incontrovertible fact that the current brand extension and increase in portfolio will help the company's already established brand equity to help it push the new products on the stable.
Considering these factors, one may not be wrong to conclude that the new step was taken to strengthen its market dominance and demonstrate a remarkable migration from its known mainstay, beer products, to making a bold entry into wines, spirits, and alcoholic flavored drinks.
Nigerian Breweries Plc, on its successful completion of Distell Nigeria acquisition on June 1, 2024, has officially completed its market expansion drive to reposition for a better grab of the drinks market in the largest black nation in the world.
The company acquired a majority stake of 80 percent in Distell Wines and Spirits Nigeria Limited (Distell Nigeria), following the approval of the South Africa Reserve Bank (SARB) for the acquisition by Nigerian Breweries Plc of the shares of the South African entity, Distell International Limited (now known as Heineken Beverages Holdings Limited) in Distell Nigeria, as well as the import business of Distell International Limited in Nigeria.
The Managing Director, Nigerian Breweries Plc, Hans Essaadi, noted that the acquisition and subsequent commencement of business operations aligned with the strategic objective of the brewery company to expand its current product offerings beyond beer to include wines, spirits, and flavored alcoholic beverages.
Essaadi stated that the company remained unwavering in its commitment to cater to the diverse needs of consumers, adding that "This acquisition is part of efforts to provide access to a complementary multi-category portfolio of fast-growing brands of wines and spirits market segment and capture significant growth opportunities in the wines and spirits segment of the brewing industry. We are excited to have the process completed and can't wait to see how this transforms our business".
Managing Director, Distell Nigeria, Mr. Steve Ighorimoto, in a glaring show of excitement on the development, stated that the acquisition was an exciting new chapter for the company as it would help increase the capacity necessary to achieve improved business performance.
He said, "We are excited to be a part of Nigerian Breweries, as we share in the solid track record of growth, including a highly engaged, dynamic, experienced, and diverse team. These changes will strengthen the organization's manufacturing, marketing, and distribution capabilities while ensuring sustainable growth and maximum value creation for all stakeholders."
Distell Nigeria is reputed for the local production of wines and ciders under license from Heineken Beverages.
With the acquisition, however, Nigerian Breweries would have access to both the local production and the importation of wines, spirits, and flavored alcoholic beverages brands from South Africa, including Amarula Crèam Liquor, Nederburg, Drostdy-Hof, 4th Street, Bain's Whiskey, Knight Whiskey, Scottish Leader Whiskey, Chamdor wine ranges, Hunters, and Savanna.
Nigerian Breweries Plc's shareholders, on December 20, 2023, approved 80 percent stake in the acquisition of Distell Nigeria Lagos, the move that signaled an overwhelming approval of a takeover in Distell Wines and Spirits Nigeria Limited (Distell Nigeria) and the import business of Heineken Beverages (Holdings) Limited (Heineken Beverages).
The approval, which was given at the company's Extraordinary General Meeting (EGM) held on December 20, 2023, the Board proceeded to conclude the transaction that gave Nigerian Breweries Plc the majority stake in Distell Nigeria and the exclusive right to import, market, and distribute in Nigeria, Heineken Beverages' wines, spirits, and ciders brands from South Africa, including the right to produce any of the imported brands locally.
Speaking during the EGM, Board Chairman, Nigerian Breweries Plc, Asue Ighodalo, explained that the acquisition aligned with the company's vision to become a Total Beverage Company, by adding wines and spirits to the product portfolio to cater to its diverse consumer needs.
Ighodalo said: "This acquisition is part of efforts to provide access to a complementary multi-category portfolio of fast-growing brands of wines and spirits market segment and capture significant growth opportunities in the wines and spirits segment of the brewing industry."
National Coordinator, Progressive Shareholders Association of Nigeria, Boniface Okezie, lauded the board and management for taking a decisive step to expand the business amid the complex and challenging business environment.
Speaking on the development, Company Secretary and Legal Director, Nigerian Breweries Plc, Uaboi Agbebaku, added that the consideration for the acquisition approved by the shareholders was about N7 billion and that the company had earlier received a confirmation from the Federal Competition and Consumer Protection Commission that the transaction would be treated as internal restructuring, meaning that no further regulatory approval process would be required.
Uaboi stated that "the parties to the transaction will now proceed to agree on the final terms and conditions of the sale and purchase agreement to conclude the transaction in the first quarter of 2024."
Nigerian Breweries Plc, a member of the Heineken Group, is Nigeria's pioneer and largest brewing company.
No doubt, the announcement by Nigerian Breweries of its acquisition of Distell Wines and Spirits generated controversies especially in the FCMG section of the industry, given the competition in the market and the state of the economy.
With a projection of a market share growth of 16.79 percent by 2024-2028, resulting in a market volume of $12.3 billion in 2028, Nigeria's beer market has been rated one of the 10 fastest-growing markets in the world.
Things are happening fast in the country's beer market as each of the players looks for an opportunity to have a competitive advantage over the other.
Until 2011, the duel between Nigerian Breweries Plc and Guinness Nigeria was pronounced, but with the entry of AB InBev, one of the world's top brewers, which acquired a majority share in the International Breweries Ilesa, manufacturers of Trophy Lager and also took control of the ownership of Hero, a popular brand in the Eastern market, the game has been drastically altered.
As it were today, almost all the players have extended their frontiers through acquisition and brand extension into the spirits and wines portfolio.
Nigerian Breweries, in a declared loss in 2023 battled the headwinds of the foreign exchange instability in the financial year that occasioned an unprecedented loss of N106 billion.
The brewery firm, in its determination to meet the variant needs of its teeming consumers has left not a few tongues wagging about what plans the company has for a bold comeback.
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Nigerian Breweries Plc did not waste time to unveil a roadmap to refloat the business and return to market vibrancy.
Apart from approval obtained from its shareholders to raise N600 billion through rights issues, the company also announced plans to diversify its portfolio with the acquisition of Distell Wine and Spirits, a South Africa-based company whose global footprints in the wines and spirits business is remarkable.
Nigerian Breweries Plc began November 2021 with the acquisition of the South African giant by Heineken BV, the majority shareholder of Nigerian Breweries put at $2.56 billion.
Those ignorant of Heineken's heavy presence distillery market only demonstrate a shortage of knowledge of the track record of the company.
In 2022, the annual report shows a company not just a global player but a big earner, as Its full year ended in June 2022 showed a sales volume of 823.9 million liters of its products, indicating that it stands quite strongly against global giants like Moët Hennessy Louis Vuitton, Diageo, Altria, Wuliangye Yibin, Pernod Ricard, and Brown-Forman.
Distell distilled an impressive N34.133 billion (N2.365 trillion) in revenue in the same year. In a year during which the biggest player in the sector posted revenue of N79.2 billion, Distell's performance presents a decent report card that enabled analysts to project the impact that a company with the global network of Heineken would make in further penetrating the brand in Nigeria and other parts of the world.
Its sales volume, profits, and earnings per share all grew in double digits between 2022 and 2023, according to information on its annual report, and with the takeover of its business by Heineken the opportunity to grow its global presence, which accounted for only 8.8 percent of its revenue in 2022 has received the needed push.
The wine and spirits market in Nigeria is huge, with locally-produced brands holding their own against imported ones, experts have projected the market to record a cumulative average growth rate of approximately 11 per cent between 2023 and 2027.
