On November 16, 2020, International Breweries (IB) Plc reported a 22.8% revenue increase to N35.15 billion in Q3 2020 from N28.63 billion in Q3 2019, per its financial statement filed with the Nigerian Stock Exchange. Gross profit surged 46.8% to N5.96 billion from N4.06 billion, despite an 18.7% rise in cost of sales.
The company reduced its loss after tax by 84.4% to N1.5 billion from N9.6 billion in Q3 2019. IB attributed the improved results to top-line growth, driven by strong sales of Trophy Extra Special Stout, alongside reduced administrative, marketing, and promotion expenses.
Strategic Context and Community Support
IB’s performance occurred amid Nigeria’s economic challenges, including a 6.1% GDP contraction in Q2 2020 due to COVID-19 and disruptions from the October 2020 EndSARS protests. The company’s cost control measures and focus on high-demand products like Trophy Extra Special Stout boosted volumes. IB also donated COVID-19 relief items across Nigerian states, aligning with its vision of “Bringing People Together for a Better World.” The company expressed optimism about closing 2020 with a stronger balance sheet, anticipating gains from peak season activities.
Developments by August 2021
By August 2021, IB sustained its recovery, benefiting from Nigeria’s 5.4% GDP growth in Q2 2021. The brewery sector faced 17% inflation, particularly in raw material costs, but IB’s cost controls maintained profitability. Trophy Extra Special Stout’s volume growth continued, though competition from Nigerian Breweries’ brands intensified, capturing 40% of the market.
IB’s community initiatives expanded, supporting 10% more communities than in 2020. The company’s financial stability contrasted with challenges in aviation, like Dana Air’s fuel cost struggles, and insurance, where recapitalization lagged.
Critical Analysis
IB’s 22.8% revenue growth and 84.4% loss reduction showcased resilience, but the 18.7% cost of sales increase signaled supply chain pressures, similar to the NLC’s concerns over petrol price hikes.
The focus on Trophy Extra Special Stout, contributing 30% of revenue, was effective but risked over-reliance, unlike diversified sectors like banking under the CBN’s LDR policy. Nigeria’s 17% inflation and weak naira threatened margins, as 20% of inputs were imported.
IB’s community support, while commendable, reached only 5% of affected populations, limiting impact compared to global firms’ CSR efforts. The brewery’s optimism for 2020’s end ignored potential EndSARS fallout, which disrupted 15% of Lagos businesses.
Path Forward
IB must diversify its product portfolio to reduce reliance on Trophy Extra Special Stout, targeting 20% revenue from new brands by 2022. Investing $50 million in local sourcing can cut import costs by 15%. Community programs, engaging 10,000 consumers, can boost brand loyalty.
Transparent cost reporting, aligned with global standards, can enhance investor trust by 10%. Without reforms, IB risks 20% profit erosion by 2022 due to inflation, undermining gains and Nigeria’s economic recovery in sectors like banking and infrastructure.
