NB targets 60% local sourcing of raw materials by 2020

Nigerian Breweries (NB) Plc. says it is targeting 60 per cent sourcing of raw materials locally by 2020.
Mr Nicolaas Vervelde, NB’s Managing Director, said this at the company’s Pre-AGM media briefing held on Tuesday in Lagos.
Vervelde said the company at the moment sources 50 per cent of its raw materials locally.
“At a current sourcing level of about 50 per cent of its raw materials locally, the brewer is optimistic of achieving its 60 per cent target by 2020,” he said.
Vervelde said Nigerian Breweries was also making progress in the deployment of new hybrid sorghum varieties, adding that yields have increased over time in line with the firm’s growth projections.
The managing director said the company had embarked on various sorghum value chains to increase its source locally.
Vervelde said the company had been in the sorghum value chain since 1998, noting that it was also investing in research and development in regard to sorghum seeds.
He said the company was making progress with its partners – International Fertilizer development Centre (IFDC) and Psaltry International, a local processing company, on value extraction from cassava.
Vervelde said the company at the moment had two sorghum plants in Kaduna and Aba to improve local production of the product in the country.
He said it signed a Memorandum of Understanding (MoU) with the Ministry of Agriculture in 2016 to enhance sourcing of raw materials locally.
On the company’s performance during the period under review, he said that 2016 was challenging due to the impact of high inflation, scarcity of foreign exchange and drop in oil price at the international market.
Vervelde said that government revenue in 2016 was under pressure due to crude oil price crash, which led to low purchasing power.
He, however, expressed optimism in the company adapting to policies in the operating environment in order to deliver good return on investment to stakeholders.
“It is anticipated that economic activities will improve in 2017, considering the far reaching fiscal and monetary measures being planned and implemented by the Federal Government.
“It is therefore hoped that with the gradual rise in the price of oil and a steady increase in the volume of oil output, the Naira will be strengthened and forex will be more available for businesses.
“The brewed product market would remain competitive and consumers are expected to continue the down-trading as they seek for more affordable brands,” he said.
Vervelde said that cost leadership and market leadership supported by innovation remained the company’s key strategic pillars.
He said that the company had developed a set of competing portfolio to address the needs of its diverse consumer base.
The managing director, however, decried the low per capita consumption of beer in the country.
According to him, Nigeria has a large population of over 180 million people, but it only consumes 11-litres per person, while other countries with large population have far higher consumption per capita.
He said the performance of the beer industry in the last year had been a reflection of the economy, noting that the industry had been undergoing slow growth mainly due to recession and low consumer purchasing power.
The company, for the financial year ended Dec. 31, 2016, posted a turnover of N314 billion against N294 billion posted in 2015, an increase of seven per cent.
Its profit after tax stood at N28.4 billion, lower than N38.1 billion achieved in the comparative period of 2015.
The company’s operating profit dropped to N53 billion compared with N62.2 billion in 2015, a decrease of 15 per cent.