Nigerian Breweries Targets Market Share, Efficiency With New Acquisitions

Nigerian Breweries Plc (NB) said the planned purchase of two local beermakers is aimed at adding market share in Africa’s most populous country while avoiding the cost of constructing new factories.

“The acquisition will strengthen our market coverage, market share and efficiency,” Chief Executive Officer Nicolaas Vervelde told reporters today in Lagos, the commercial capital. “If we don’t make the acquisition, we might be forced to build a new brewery.”

Shareholders of Lagos-based Nigerian Breweries, which is controlled by Dutch beermaker Heineken NV (HEIA), are scheduled at the annual meeting later this month to vote on buying Sona Systems Associates Business Management Ltd. and Life Breweries Ltd. The acquisitions will give Nigerian Breweries five additional beermaking plants across the country.

Nigeria, with more than 150 million people, is potentially the continent’s largest consumer market and is attracting increased investment from global beermakers seeking to expand market share. SABMiller Plc (SAB), the world’s second-largest brewer by volume, said on Feb. 25 that it plans a $100 million plant in the southeastern city of Onitsha within two years.

Guinness Nigeria Plc (GUINNESS), the local beermaking unit of distiller Diageo Plc (DGE), said on March 11 that it will spend $336 million to expand brewing capacity in the west African nation.

The purchase of Sona Systems and Life Breweries will offer “spare capacity,” Vervelde said. Nigerian Breweries isn’t ruling out further purchases, the CEO said.

“If another opportunity calls for acquisition, we will look at it, and if it will add returns to shareholders, we’ll take advantage of it,” he said.

To contact the reporter on this story: Emele Onu in Lagos via eonu1@bloomberg.net.

To contact the editor responsible for this story: Dulue Mbachu at dmbachu@bloomberg.net

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