Despite the challenging macroeconomic environment in 2018, Nigerian Breweries Plc, NB, has remained undeterred in its marketing expedition, as the company spent over N23.7 billion on marketing and sales activities within the year. This represents the highest the company has allocated for the same purpose since 2015 when its marketing spend was slightly lower at N23.5 billion.
This was made known in the company’s annual financial report. The report, however, said that between 2016 when the Nigerian economy fell into recession and 2017, the post-recession year, the company’s marketing spend was slightly lowered to between N22.3 billion and N22. 4 billion. Yet, this represented a major undertaking compared with competitors.
“The increase in NB Plc’s marketing spend has come in spite of the various factors that has undermined the sector and hindered profitability. Factors such as volatility in the economy, stiff competition, lower consumer spending and elevated cost of production have dogged the sector and left it struggling for growth.”
“Other factors which have impacted negatively on the sector have been the security situation in the middle-belt of the country following disruptions in supply of barley, sorghum, maize, rice and wheat, which are primarily sourced in the region by the brewery companies,” said the report.
The aforementioned challenges have greatly impacted on the performance of Nigerian Breweries who closed its 2018 operations with a lower profit margin than it posted any time since 2008.
Explaining further, the report showed that the company posted a drop of over N20 billion in sales revenue and costs failed to go down with sales revenue, resulting in a record profit drop for the brewing giant.
Except for an improvement in 2017, Nigerian Breweries has been experiencing declining profits since 2014. The company ended the 2018 financial year with an after tax profit of N19.4 billion – only slightly ahead of the half year profit figure of N18.4 billion.
“The profit for the year represents a 41% drop year-on-year, measuring just one-half of the company’s profit figures in 2015. Profit margin went down from 9% to 6% over the review period, a sustained decline from close to 16% in 2014,” the report revealed.
The company’s management blamed low consumer confidence for lost sales, pointing to the environment conditioned by the run-up to the 2019 general election. It considered the level of growth the economy recorded in the year insufficient to spur consumer demand and sales volume.
But despite the many challenges, Nigerian Breweries has remained bullish on the marketing arena and continues to out-spend its closest competition, Guinness Nigeria by more than 50 percent. The company has spent heavily on billboard, TV, radio, press and especially digital marketing.
According to sources within the company, the company had actually increased to a significant proportion its digital budget since 2016 in a bid to re-engage the youth market and sustain brand loyalty.
“In the year under review, NB Plc accelerated marketing activities in the value-for-brand segment in a bid to drive market share growth for 33 Lager beer and Goldberg. The company launched a campaign called “33 Friendship party” to drive engagement for 33 larger beer and deepen its position in the minds of consumers as a friendship beer,” said the source who wouldn’t want to be named.
The brewery giant also strengthened its lager category with the launch of Tiger beer into the Nigerian market. The Asian brand was launched soon after AbInBev unveiled Budweiser in Lagos. In the case of Star, the flagship brand on its stable, created a major emotional touch points with consumers by hosting several activation around the country to boost loyalty.
But the one activation that will linger the longest in the minds of consumers is Star’s partnership with the Nigerian Football Federation in support of the Super Eagles who represented Nigeria at the Russia 2018 World Cup. Following the announcement of the partnership, Nigerian Breweries immediately deployed multi-channel campaign to leverage its partnership with the Nigerian football team.