As
the level of confidence in the Nigerian capital market builds up in the
banking subsector this year following government’s intervention in the
industry, trading activities in other sectors as well have shown that
investors are also seeking safe haven in Breweries and Food/Beverages
sectors.
Analysis
of trading activities in the two sectors, in terms of traded volume,
since transaction reopened at the Nigerian Stock Exchange (NSE) this
year, showed an increase of 45 per cent in Breweries’ stocks and an
increase of 250 per cent in Food/Beverages’ stocks when compared to the
volume traded fortnight to the end of last year.
Within
two weeks, trading in Breweries sector grew from 10.9 million shares to
15.8 million while Food/Beverages sectors moved up from about 58.1
million shares to 202 million.
Bola
Oke, a finance analyst at WealthZone Company, an investment management
firm, said equities in the Breweries and Food/Beverages sectors have
always been the toasts of retail investors as well as fund managers.
A
stockbroker at Eurocomm Securities Limited, Virginus Agada, said that
companies into fast moving consumable goods and brewery business are
good stocks to buy because “when people are happy they drink and eat to
celebrate and when they are sad they still drink and eat.” Mr. Agada
said, “Investors should buy more stocks in the breweries sector because
drinks will continue to sell whether in festive or depressed seasons.”
Heineken acquisitions
While the Food/Beverages sector may lose one of its blue chip stocks,
Nigerian Bottling Company, bottlers of Coca Cola drinks, following the
company’s plan to delist, the Breweries sector may get more patronage
following the recent acquisition of some breweries by Heineken, the
majority shareholder in Nigerian Breweries.
Heineken,
last week, announced that it has strengthened its platform for growth
in Nigeria via the acquisition of two holding companies from the Sona
Group. The two acquired businesses have controlling interests in each
of the Sona Breweries, International Beer Beverages Industry,
Benue Brewery, Life Breweries Co., and Champion Breweries.
Tom
de Man, President ,Africa Middle East of Heineken, said the
company’s interest in the nation’s beer industry is because “Nigeria is
one of the world’s most exciting beer markets and one of the most
important countries for Heineken.” The spokesperson for Heineken
Nigeria, Edem Vindah, and his counterpart at Nigerian Breweries, Yusuf
Ageni, could not comment on why Nigeria has been chosen as the
destination for beer market. Efforts to contact George Toulantas,
investor relations manager of Heineken in Greece, were also not
successful as calls and text message to his phone number did not go
through.
Meanwhile,
a report by Renaissance Capital, an investment bank, said, “Nigeria is
the second largest beer market in Africa with an estimated production
capacity of 17 mn hl in 2009, representing 15 per cent of the African
market’s estimated total beer production capacity of 92 mn hl.” “In our
view, Nigeria is a good first point of call with its strong
demographics: a population of 156 mn and estimated gross domestic
product (GDP) per capital growth of 8.6 per cent,” the report said. It
further noted that Nigeria remains one of the least penetrated beer
markets in the world, particularly in terms of its strong demographics.
“Because
of this, we believe that growth in beer consumption will be driven by
rising per capita income and GDP; an increase in per capita beer
consumption; Nigeria’s young population and its steady population
growth, and a gradual change in cultural factors, as a bar culture
arises among the younger population,” it said.
In
the mean time, the report said that this “aggressive move” by Heineken
should be “a cause for concern for other players in the Nigerian
market, like Diageo (through Guinness Nigeria) and SAB Miller,” adding
that follow-up reactions to this development is expected by other
competitors.
