Nigeria: AB InBev to merge its 3 breweries

AB InBev wants to merge its three breweries in Nigeria. Currently the world's leading brewer owns indirectly 82.8% of Pabod Beverages, 75% of Intafact and 72.2% of International Breweries.  The boards of directors of the three involved companies have agreed to explore further details of a merger.

Ricardo Tadeu, AB InBev Zone President for Africa, said that “the enlarged company would have a significantly increased geographical footprint and a consolidated database system, enabling enhanced efficiency.” Further he expects a “positive impact on communities and the economy due to increased investment by the enlarged company and the long-term growth prospects of Nigeria.”

The merger is subject to the required regulatory and shareholders’ approvals. The three companies will continue to operate as separate units until the required approvals are received.

Last month, AB InBev’s CEO Carlos Brito announced plans to enlarge brewing capacity in Nigeria. “We pretty much sell everything we can produce… We need more capacity in Nigeria,” he said. “Nigeria cannot import beer. I mean the taxes are prohibitive so we have to produce locally… We don’t have global brands because you can’t import them, so you have to produce locally. So [increasing production] capacity will also be used for that – not only to continue to support the growth of the local brands, but also to enable our global brands to be present in that market as well.”

AB InBev did not have a foothold in Africa before the takeover of SABMiller last year.  So far, Heineken and Guinness are the main import brands with the best market reputation in most of Africa. AB InBev sees therefore a high market potential for its own global beer brands such as Budweiser, Stella Artois and Corona, which it intends to introduce shortrly in many African markets.

SABMiller entered the beer market in Nigeria in 2009. Its Hero Lager brand was  launched in 2012 and grew from zero to become the third biggest brand  despite a weak Nigerian economy, which followed the fall in crude oil prices. Per capita consumption of beer in the country with the highest population in Africa is still low compared to other developing beer markets across the globe. A population of over 170 million is consuming on average only 11 liters per capita and year, which leaves enough room for growth and attracts all major brewers.

Today, AB InBev operates three breweries in Nigeria, the most recent of which was commissioned in Onitsha, Anambra State in 2012. This was a green-field brewery facility with an investment of US$100-million. In addition the company owns a spirits company based in Port Harcourt, Rivers State, called Beverage Management Services (BMS)

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