Business

NB Plc products’ price review, fate Nigeria’s FMCG and matters arising

Few days ago, Nigerian Breweries (NB) Plc announced its decision to carry out a price review of some of its products from August 10.

The company, in a memo dated August 1, 2023 and signed by its Sales Director, Ayo Lawal to all its direct customers, explained that the price review became imperative due to the “continued rising input cost and the need to mitigate the impact.”

Clarifying the earlier memo, the company, through its Corporate Affairs Director, Mrs Sade Morgan, in another letter dated August 2, 2023, described the price review as a “moderate” one expected to affect some and not all of the stock keeping units (SKUs) of the company’s brands.

The company, for the umpteenth time, attributed the review to the increasing rise in input cost but assured of its commitment to delivering excellent customer services and enhancing consumer satisfaction.

With the review, NB Plc is obviously towing the footsteps of other brands in the nation’s Fast Moving Consumer Goods (FMCG) sector that have gone the price review way.

While the latest development may not have gone down well with some Nigerians, especially consumers of the affected products since they will now need to pay more for such products, not a few however see it otherwise. For this class of people, the review serves as a reality check, especially for those perhaps still under the illusion that the nation’s FMCG sector is immune to the vagaries of hostile business climate.

Interestingly, the signs that all may not be well with the sector, they claim, have been there all along for everyone to see. The steady decline in fortune for some of the players in the sector never came in a rush.

For instance, in May this year, Guinness Nigeria Plc, a major player in the brewing category, announced a price review, a development the company attributed to the not-too-favourable economic climate of the country.

Also, in July, despite the half year N277 billion revenue recorded by NB Plc for the half year ended June 30, it turned out to be a marginal growth when compared with the N274 billion recorded in the corresponding period in 2022.

In 2022, an unaudited half year 2022 report of Nigerian Breweries and International Breweries revealed that an outrageous sum of N172, 268 billion was expended on raw materials by the two brewing companies, representing a 21.51 percent increase from N141.776 billion recorded in the same period in 2021. The amount also represents 74.85 percent of the total costs of sales of N230.145 billion recorded by the firms during the period under review.

The fates of these three brewing firms – the Nigerian Breweries, Guinness Nigeria and International Breweries Plc – are red flags of the not-too-pleasant scenario the nation’s FMCG, and the larger manufacturing sector is passing through of late. The trio dictate the pace in that market segment with market shares of 54 percent, 24 percent and 22.2 percent, respectively, as at September 30, 2022 and the market segment will expectedly catch cold each time any of them sneezes.

The planned exit of British multinational pharmaceutical company, GlaxoSmithKiline, from Nigeria after 51 years of operation, is another indication of turbulence that the nation’s manufacturers are presently facing.

“I think what we should be thinking of is how to fix the economy and make the business space much more friendly for investors to operate. The issue of price review is not peculiar to any business,” argued the Chief Executive Officer, Wealthgate Advisor, Mr Biyi Adesuyi.

The marketing/finance expert argued that it will be unfair to query any move by a business to review its commodity prices or even exit from a business environment that is proving hostile by the day.

“Unless we want to play the ostrich, any brand is justified to review its prices. Don’t forget they too have to survive. What we are presently seeing are results of a hostile environment. The problems of electricity, high cost of fuel, poor infrastructure, which most times hinder smooth product distribution, the unstable state of the nation’s currency and even inability of multinationals to repatriate their funds home are some of the reasons businesses are reviewing their prices while those with access to alternative markets are simply relocating.

“Emirate Airline left due to some of these problems. GSK is also leaving due to this and fortunately for them, they have access to other markets. I think what we should be saying now is to encourage others that still decided to wait and do business here,” Adesuyi stated.

While calling on the Federal Government to act fast towards providing solutions to most of these challenges, Adesuyi however advised consumers to be more circumspect in their spending since more of such reviews will be seen in the coming days.

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