Nigerian Breweries Announces Strategic Reorganisation Amidst Tough Economic Climate

Nigerian Breweries Plc, the largest and oldest brewer in Nigeria, has unveiled a major reorganization plan that includes the temporary suspension of operations at two of its nine breweries.

This decision is part of a broader Business Recovery Plan that aims to enhance operational efficiency and secure a resilient future for the company and its stakeholders.

In an official statement released to Nairametrics, the company detailed its commitment to minimizing the impact on its workforce, emphasizing alternatives such as relocating and redistributing employees to the remaining seven breweries. Additionally, support and severance packages will be provided to those unavoidably affected by the changes.

Sade Morgan, Corporate Affairs Director of Nigerian Breweries, signed the statement indicating that this restructuring is crucial for improving the company’s financial stability and returning to profitability, especially given the current challenging business environment.

“The persistent challenges, including double-digit inflation rates, the devaluation of the naira, and a general decline in consumer spending, have necessitated this reorganisation to streamline operations and reduce costs,” Morgan explained.

The company has been forthright with its unions, having sent out letters signed by Human Resource Director Grace Omo-Lamai to the leadership of the National Union of Food, Beverage & Tobacco Employees (NUFBTE) and the Food Beverage and Tobacco Senior Staff Association (FOBTOB). The correspondence detailed the proposed plan and invited union leaders to discuss the implications and collaborate on the best pathways forward.

This reorganization follows the company’s recent announcement to the Nigerian Exchange Group (NGX) about its intent to raise up to ₦600 billion through a rights issue. This move aims to restore the balance sheet following significant net finance expenses recorded in 2023, largely driven by a ₦153 billion loss due to the devaluation of the naira.

Hans Essaadi, Managing Director/CEO of Nigerian Breweries, spoke about the vital nature of these strategic adjustments. “The tough business landscape has taken its toll not only on our operations but across the industry. This strategic reorganization will allow us to manage costs more effectively and prepare for sustainable future growth,” Essaadi remarked.

He further emphasized the company’s commitment to its employees and host communities. “While we regret the inevitable impact on our employees at the two affected breweries, we are committed to reducing this impact through various supportive measures. We also continue to invest in our communities to maintain and strengthen our bonds,” he added.

The reorganization plan includes optimizing production capacity at the remaining breweries, some of which have recently received significant capital investments. This strategy not only aims at efficiency but also prepares the company for future expansions.

Additionally, Nigerian Breweries has recently expanded its portfolio by acquiring an 80% stake in Distell Wines and Spirits Limited, marking a significant foray into the wines and spirits market. This acquisition reflects the company’s resilient and forward-thinking strategy to deliver long-term value creation for its shareholders and other stakeholders.

The Business Recovery Plan of Nigerian Breweries is a multifaceted approach that involves not just financial restructuring through rights issues but also operational tweaks like the suspension of certain breweries.

The plan is designed to fortify the company’s market leadership by focusing on its broad portfolio across various beverage categories, including Lager, Stout, Malt, Soft drinks, and, recently, Wines and Spirits.