Fuel price increases negatively impacts growth
The high rate of inflation in 2012 due to the fuel price increases of January affected alcoholic drinks performance in 2012, not really due to higher prices (as manufacturers tried to keep price increases as low as possible) but due to depressed consumer spending power. Growth in 2012 was therefore weaker than over the review period, for almost all categories. Beer in particular posted quite weak growth, mainly in lager. Non-alcoholic beer, on the other hand, performed well, driven by the Fayrouz brand, which is frequently used as a mixer for spirits.
Alomo Bitters: a herbal alcoholic drink changes the market
One spirit category, bitters, performed extremely well over the latter part of the review period, due to the sudden popularity of a herbal bitters brand, Alomo Bitters, which only began to be produced in Nigeria in 2010. The product witnessed a phenomenal increase in popularity as herbal bitters products are thought to have medicinal benefits, including virility in men. They are widely consumed, with the non-alcoholic beer Fayrouz being a popular mixer. They are also quite inexpensive compared to normal spirits, being packaged in plastic bottles. Their sales are another factor for why lager sales were poor in 2012, as some lager drinkers moved to drinking herbal bitters mixed with non-alcoholic beer.
The big two players continue to lead but SABMiller begins to expand
The largest companies, Heineken NV (largely through Nigerian Breweries among other subsidiaries in Nigeria) and Diageo (through Guinness Nigeria), continue to lead the market, through their ownership of key beer brands (and spirits brands in the case of Guinness Nigeria). However, SAB Miller’s entry into the market in 2009 is intensifying the competition, with the company being particularly busy during 2011/2012, acquiring the important local player International Breweries and launching a few regional lager brands.
On-trade channels continue to lead sales
Drinking is widely considered a part of social activity in Nigeria and therefore most consumers seldom drink alone. As a result, on-trade outlets lead beer sales, the largest category in the alcoholic drinks market. However, the bulk of spirits and wine is sold through off-trade outlets, such as small grocery retailers and open markets, since such products are mostly consumed at home or during parties and other social gatherings. Sales of wine through formal retailers, such as supermarkets, continued to increase over the review period; however traditional small grocery retailers, including open markets such as the Oke Arin market, remained the largest channel for wine and spirits in Nigeria.
Strong growth expected to resume over the forecast period
After the depressed environment of 2012, the forecast period should witness the return of reasonably high growth, with a 9% CAGR in total volume terms expected in the largest category, beer. Spirits and wine should continue to grow quite fast, not yet being mature in the Nigerian market. The expected increase in demand is attributed to the fact that Nigeria’s large population continues to grow, thereby providing an ever increasing consumer base. The positive outlook for the Nigerian economy also means consumer spending is likely to increase and further support the development of alcoholic drinks sales. New brands and the entry of new players will result in increased competition, aggressive marketing and ultimately also help to fuel growth.
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The Alcoholic Drinks in Nigeria market research report includes:
- Analysis of key supply-side and demand trends
- Detailed segmentation of international and local products
- Historic volumes and values, company and brand market shares
- Five year forecasts of market trends and market growth
- Production, imports by origin, exports by destination
- Robust and transparent market research methodology, conducted in-country
Our market research reports answer questions such as:
- What is the market size of Alcoholic Drinks in Nigeria?
- What are the major brands in Nigeria?
- Have there been any alcoholic drinks legislative changes over the past 12 months?
- How is the alcoholic drinks industry affected by the recession?
- What is consumed more; beer, wine or spirits?
- What have been the key trends seen in new product developments?
- Do alcoholic drinks consumers want value for money or added value?
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This industry report originates from Passport, our Alcoholic Drinks market research database.