Nigeria is among the most profitable beer markets for industry giant Heineken. Locked in relentless competition with other multinational alcohol corporations, the company is seeking to consolidate its grip of Nigeria. Through a new acquisition of additional equity stakes in Nigerian Breweries, Heineken is pushing for further market domination in the country.

Nigerian Breweries is the largest beer maker in Nigeria, supplying both the Nigerian as well as other West African markets. In 1949, still under British Colonial Rule, Heineken set up “Nigeria Brewery” (singular at first, later plural: Nigerian Breweries) together with United Africa Company (UAC, a Unilever subsidiary), according to Olivier van Beemen.

Today, Nigerian Breweries’ majority owner is Heineken, controlling 37%. Nigeria’s alcohol market is of superior strategic importance for Heineken, the second largest beer producer in the world. In fact, Nigeria belongs to the most lucrative alcohol markets in the world, according to Heineken in Africa.

For Heineken, Nigeria is by far the most important African country: it delivers about half of the brewer’s continent-wide turnover,” writes Olivier van Beemen, in his book “Heineken in Africa”.

It’s the law of numbers here: Lagos, the economic capital, is the heart of a conurbation that 20 million people call home. Nigeria as a whole is about 200 million strong; no other African nation comes anywhere near. Since the turn of the century, it has stabilised somewhat and has become substantially more affluent, and this means Nigeria is turning into a potentially vast consumer market.”

Olivier van Beemen, Heineken in Africa, page 31
Market concentration and domination
The Dutch beer giant controls two-thirds of the Nigerian beer market. In good times the gross margins are above 50%, making Nigeria the second most profitable market for Heineken, after Mexico. In fact, for Heineken selling beer in Nigeria is more lucrative than selling their products in the UK, even though consumption in the latter is 2.5 times higher, according to Heineken in Africa. The multinational has managed to become part of Nigerian society through strategic promotion and sale of “local” brands.

Not A Love Story: Heineken In Africa

Now, with the help of new moves, Heineken is extending and solidifying its market domination.

In a series of transactions between August 27 and August 31, 2020 Heineken bought additional stakes to increase its majority shareholding in Nigerian Breweries to 55.9543%, as per The Nation reporting.

According to insider transaction reports from the Nigerian Stock Exchange (NSE), Heineken had acquired via Heineken Brouwerijen B.V, 0.192 million ordinary shares of 50 kobo each of Nigerian Breweries at an average price of N37.13 per share.

With the initial acquisitions, Heineken Brouwerijen BV’s holding increased to 37.7643%. The latest acquisitions represented 0.0024 per cent equity stake, increasing Heineken Brouwerijen BV’s shareholding to 37.7667%. Thus, Heineken’s majority shareholding now stands at 55.9567%, based on available reports.

Heineken is thinking forward by aquiring as much shares as possible from Nigerian Breweries. Possibly they are eyeing the prospects of a single large African market envisaged by the African business community under the African Continental Free Trade Area (AfCFTA). Nigeria has already signed the AfCFTA agreement. Having more shares in Nigerian Breweries would extend Heineken’s reach across the region.

Heineken’s push for market domination in Nigeria is ruthless and has been found to be unethical as well. Movendi International reported a case in 2017 where the Nigerian unit of the Dutch brewer Heineken NV was under police investigation after a former supplier complained to the government. And the book Heineken in Africa details numerous examples of Heineken’s unethical business conduct in Nigera.

Not only Nigeria, all of Africa
Big Alcohol is relentless in their push to drive more consumption and make more profit in the African region which is considered one of the fastest growing markets worldwide.

This led to a turf war between AB InBev and Heineken in South Africa. To compete with the AB InBev market dominance in the country Heineken increased investment in its Sedibeng brewery near Johannesburg. This investment meant an aggressive push to increase Heineken beer consumption. The aim is to hit annual capacity of 7 million hectolitres in South Africa.

Beer sales continue to rise in Nigeria despite 10% drop in Europe.

Today Heineken Share price is up almost 5%

My tips

Invest in Alcohol producers
Cigarette producers
And Pharmaceutical companies that make drugs to treat them when the alcohol and cigarettes start killing them