Nigerian Breweries Plc. (NB Plc.), the country’s dominant brewer, has announced plans to cut jobs and close some of its plants following a staggering N106 billion ($92 million) loss in 2023.
The company said after a devastating year that saw its first loss in at least 11 years, it is undertaking a “company-wide reorganisation” that will see two of its nine plants “temporarily shut” and an unstated number of jobs axed.
“We recognize and regret the impact that the suspension of brewery operations in the two affected locations may have on our employees,” Managing Director/CEO Hans Essaadi said in a statement Wednesday.
“We are committed to limiting the impact on people as far as possible and providing strong support and severance packages to all affected.”
Tough business landscape
NB Plc., producer of iconic brands like Star Lager and Gulder, has long been seen as a pillar of economic stability and a bellwether for the Nigerian consumer market.
Nigeria’s persistent economic problems dealt a heavy blow on the beer-maker in 2023. The company attributes its losses to increased operational costs, sustained pressure on consumer disposable income, rising inflation rates, and foreign exchange volatility.
“The tough business landscape characterised by double-digits inflation rates, naira devaluation, FX challenges and diminished consumer spend has taken its toll on many businesses, including ours,” Mr Essaadi said.
Two weeks ago, the company said it plans to raise ₦600 billion from current shareholders (rights issue) to bolster its finances. This move follows a net finance expense of N189 billion, largely due to a N153 billion foreign exchange loss caused by the naira’s devaluation.
Nigerian Breweries recently acquired 80 percent holding in Distell Wines and Spirits Limited, and fully acquired the import business of Heineken Beverages (Holdings) Limited. Both deals are worth N7.01 billion.
Raising prices
In February, the company implemented price hikes on its products, following a similar adjustment last August.
It says its recovery strategy includes raising new capital, reviewing its organisational structure and size, temporarily suspending operations in two plants and an optimising production in the other seven breweries.
The company has yet to disclose the exact number of positions impacted or the locations of the breweries slated for closure. But analysts expect hundreds of employees to be affected.
The company said it has informed the National Union of Food, Beverage & Tobacco Employees and the Food Beverage and Tobacco Senior Staff Association, of its decision.
Nigerian Breweries Plc, a member of the Heineken Group, is Nigeria’s oldest and largest brewing company. Established in 1946 as “Nigerian Brewery Limited,” it introduced its first STAR lager beer in Lagos in June 1949.
Today, the company boasts a diverse portfolio of 21 top-notch brands, including popular names like Heineken, Desperados, Maltina, and Amstel Malta.
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