The Nigerian Breweries PLC has issued a “Price Review Notification” to all its direct customers in the West Zone.
This was contained in a letter issued to customers on Monday, February 12, 2024, and seen by Nairametrics.
According to the statement, the price adjustments, effective from Monday, February 19, 2024, is deemed necessary to offset the impact of increased production expenses.
Although the company assured customers with fully funded and system-registered orders before the specified date will be honoured at the existing prices.
However, any orders exceeding the communicated quantity window will be subject to the revised pricing.
Insider sources reveal that this is the third price adjustment in the year that the FMCG company is reviewing its prices.
“Please accept our best compliments! This is to inform you that we are constrained to review the prices of some of our SKUs with effect from Monday 19 February 2024. This review has become necessary because of continued rising input cost and the need to mitigate the impact.
“ In appreciation of our great partnership and your commitment, we will deliver at current prices all open orders that are fully funded and created in our system before 00.00hrs on Monday 19th February 2024.”
The exact quantity of orders that will be allowed will be communicated to you by your Regional Business Manager (RBM). Any order in excess of this quantity will be re-invoiced at the new price on the 19th of February 2024.
“While thanking you for your commitment to our valued partnership, be rest assured that we will continue to support your sales/distribution efforts as always. For further clarifications, please do not hesitate to contact your Regional Business Manager. Happy Selling!!! For. Nigerian Breweries Pic.”
What we know about the price hike
The decision is a strategic response to the burden of economic headwinds, particularly the soaring production costs fueled by the 28.92% inflation rate recorded in December 2023 and the Naira’s depreciation of N1499.07 against the dollar.
This move follows a precedent set in August 2023 when Nigerian Breweries implemented a significant price hike on select products effective August 10, 2023.
Nigerian Breweries, a subsidiary of Heineken NV, faced formidable challenges in Q1 2023, grappling with losses on foreign exchange transactions and escalating loans.
The net loss on foreign exchange transactions spiked by an alarming 680%, totalling N14.641 billion in Q1, following a substantial 274% increase in 2022. Coupled with heightened interest expenses, these challenges culminated in a Q1 after-tax loss of N10.72 billion, marking the company’s weakest performance in five quarters.
The persisting losses on foreign exchange transactions and soaring interest expenses have cast a shadow on Nigerian Breweries’ profitability. In 2022, the company’s profit after tax only saw a marginal growth of 4.06%, indicating a financially challenging year.
Further complicating matters, Q3, 2023 witnessed the Group reporting a substantial loss before tax amounting to N10.319 billion, signifying a notable 56.24% surge compared to the N6.604 billion loss reported in the corresponding period in September 2022.