War on sachet alcohol: Multinationals as the ‘unseen hand’

UNEASY calm, anxiety and palpable tension have been the lot of Nigeria’s wine and spirits market of late.

This is, definitely, not unconnected with plans by the National Foods and Drugs Administration and Control (NAFDAC) to enforce the ban it had earlier placed on the production of alcohol in sachets or in less than 200ml PET in the country.

One of the reasons, the federal health regulatory authority says, is to check alcohol abuse among the under-aged persons, since the small packages can easily be concealed by school children in their pockets.

However, stakeholders in the wine and spirits market have warned of consequences, especially the likelihood of over five million direct and indirect workers and not less than 25 companies going under if such policy is implemented.

For instance, at a media briefing held recently in Lagos, the stakeholders, comprising the Manufacturers Association of Nigeria (MAN), the Distillers and Blenders Association of Nigeria (DIBAN) and other operators in the market segment, had also warned that implementing such plan could lead to over N800 billion investments going down the drain.

Some of the machines used to manufacture these packages, they explained, are specifically designed for the purpose and would therefore, become a monumental waste if the ban is implemented.

Also likely to happen, they added, is the loss of tax revenue generated from the production and sale of alcoholic beverages in those packages.

However, justifying the ban, the NAFDAC boss, Professor Mojisola Adeyeye, explained that the decision to ban the packages was not taken in a hurry, there had been collaborative efforts involving the Federal Ministry of Health and consumer protection agencies, she stated.

In spite of these explanations, the ‘whispers ’ and murmurs about the likelihood of multinationals in the sector having a hand in the decision to do away with sachet enterprises are becoming louder by the day.

This is hinged on the increasing popularity of sachet and PET alcoholic beverages among consumers and the disruption such has caused in the market segment, they alleged.

They believe the ban is tantamount to giving a dog a bad nomenclature with the aim of hanging it.

But how true could this be? Recent changes in alcohol consumption among the youths, popularly referred to as Gen Zs, point to that direction. For instance, those in this category no longer find beer drinking fashionable and this stemmed from the belief that such habit has the tendency of giving the consumer a pot belly.

Interestingly, a recent report released by Williams & Marshall Strategy, a global market research company, has also confirmed this interesting trend of the Gen Z generation, who constitute 70 percent of consumers in that market segment, tilting towards exploring a more comprehensive range of spirits.

Though the report never mentioned ‘pot belly’ as a factor for the surge in interest towards the spirit drinks, it, however, identifies globalisation, exposure to international cuisines and the influence of the digital age as some of the factors.

The rise of Nigerian-owned distilleries has also been identified as one of the major reasons since these distilleries not only produce quality products, but also strategically cater to a significant portion of consumers through sachet marketing, which is gaining dominance and giving the multinational whiskey and spirits giants a run for their marketing investment.

Furthermore, the steep decline in beer consumption can be seen in the monumental losses recorded by many players in Nigeria’s largest beer makers.

For example, while Nigerian Breweries Plc posted N145.3 billion in pre-tax loss in the last quarter of 2023, its biggest since opening shop in the country in 1946, the gains of N14 billion revenue recorded by Guinness Plc in the financial year ended June 30, 2023 were from Johnnie Walker, Baileys and Singleton and other Diageo brands, not from its lager beer or stout.

To confirm how dire the situation is, Diageo, last year, disclosed that the legendary Johnnie Walker will be exiting from the stables of Guinness Nigeria by April 2024. Not a few however believe that the exit of the Johnnie Walker, Baileys and other Diageo products could wipe off six percent of Guinness share in that market segment.

To make matters worse, Guinness Nigeria also incurred N49 billion loss in its 2023 half-year operations, citing its inability to access forex as a major operational challenge.

The decision by Nigerian Breweries to also embark on an upward review of the prices of its products, effective from February 19 on account of “continued rising input cost and the need to mitigate the impact,” may further push the Gen Zers away from beer consumption.

Unfortunately, with beer sales volumes down in high double digits, those who see the multinationals as the ‘unseen hand’ behind the ban may not be farther from the truth.