The Beer Market in Nigeria

The Beer Market in Nigeria

Globally, beer still reigns in the hearts and minds of consumers. Some describe it as “cheap, approachable, and readily available”, “a warm hug that other drinks just can’t match” or “the perfect drink for every mood”.^[1]

Sentiments among consumers in Nigeria follow this pattern as the country ranks as the 18^th country in the world that consumes the most beer, second only to South Africa in Africa. Nigeria has an annual beer consumption of approximately 2 million tons. However, demand for beer is gradually losing market share in Nigeria.^[2] Though an average yearly consumption of 2 million tons sounds impressive, this average is significantly (20%) lower than the 2.5 million tons average of the early 2010s. In 2022, beer consumption in Nigeria was at a low of 1.8 million tons^[3] and is projected to be even weaker in 2024.^[4] Demand appears to be shifting to the spirits market as consumer preference `for spirits has improved. Also, we see giants like Guinness Nigeria Plc acquiring more rights to distribute different spirits brands in the Nigerian market. The figure below shows the pattern of beer consumption between 2012 – 2022.

Figure 3a: Nigeria’s Beer Consumption Levels

Source: FAOSTAT

Despite losing some of its market share to Spirits, beer still is the dominant alcohol type in Nigeria. A survey of 1229 alcohol consumers across six states (Lagos, Abuja, Port Harcourt, Anambra, and Kaduna) in the first quarter of 2024 found 76% of alcohol consumers drinking more beer in a week relative to other alcoholic beverage types, signaling its dominance in the Nigerian market. Regarding value, beer’s market share is approximately 55% followed by Spirits (30%) and Wine (15%).^[5]

How Much is Beer in Nigeria, and How Much Do Nigerians Spend on It?

The price of beer in Nigeria is wide-ranging; from as low as ₦182^[6] ($0.12)^[7] for a 33-cl can of Gulder beer to as high as ₦1000^[8] ($0.65) for a 33-cl Hunter’s Dry cider. For a large market such as Nigeria, an argument is often made for lower prices to attract new consumers. However, this may not necessarily hold for the beer market in Nigeria. Yes, cheaper prices can attract a category of customers but price is not enough to hold first place in the hearts of consumers. A brand must have a good product and great visibility in the market.

Most consumers have a palate that guides their brand choice. In the survey, the Hero brand emerged as the most preferred brand among beer consumers, topping with about 20% followed by Heineken with 15%. The Hero brand sells for ₦550 ($0.32) for the 60cl bottle while the Heineken 33cl bottle sells for between ₦700 ($0.45) and ₦800 ($0.52). Gulder beer, though cheap did not place in the top 10. Moreover, the top breweries have multiple brands priced to attract different customer categories. As a result, even in the low-priced market, a product can face stiff competition. The figure below presents prices for selected beer brands in the Nigerian market.

Figure 3b: Prices of Beer in Nigeria (2024, Q3)

Source: Supermart.ng

Beer with its low alcohol content is usually consumed in multiples. Most Nigerians spend less than ₦5000 ($3.23) on beer each week with the average Nigerian spending approximately ₦ 4,123.7. That is, several bottles of beer (at least 20) for someone buying at the low end and just 4 – 5 bottles for someone buying at the high end. The study shows that people with university degrees though do not show significant differences in their brand selection, spend the most on beer, about 50% more. This is possibly due to their higher earning capacity. In terms of gender, males spend the most. The figure below shows the spending patterns of consumers across education, parental status, and gender.

Figure 3c: Spend Patterns in Nigeria’s Beer Market

Source: Firmus Research

What Beer Brands Do Nigerians Drink the Most and Why?

The top 3 popular beer brands in Nigeria are Hero, Heineken, and Life beer, accounting for almost half of the beer demand in Nigeria. This is followed by the Trophy brand which accounts for 10% of the beer market share. Most of the top brands consumed in the market are manufactured or distributed by the top 3 breweries with Nigeria Breweries Plc controlling over 50% of the beer market with brands like Heineken, Life, Tiger, and Star. Notwithstanding this dominance, the Hero Beer from International Breweries Plc topped the list of favorites with 20% of consumers selecting it as their preferred brand. International Breweries controls about 36% of the alcoholic beer market followed by Guinness Nigeria Plc with 12%. Other smaller brands account for the remaining 2%.

Table 3a: Top Beer Brands and Their Market Share

Taste is king in the beer market in Nigeria. Overarchingly, ‘Great taste’ is the main driving factor behind brand selection. 63% of consumers select the brands they drink because of their ‘Great taste’. But what is tasty in the beer market? When asked, consumers reflected on elements such as flavor profiles and the after-taste. Brands like Guinness Stout are loved for their bold mix of chocolate and coffee flavors and their bitter aftertaste. While some were liked for their bitter aftertaste, others were because they had no bad aftertaste. Other brands were also liked because they were light in taste, with no harsh taste, or had a natural taste. For example, the Star Radler was described by a consumer as having an ancient palm wine taste.

Aside from taste, brand visibility or popularity is one of the main reasons for selecting a particular brand. This factor influences 10% of consumers’ choices. Hero, Heineken, and Trophy rank top in this category. About 9% of consumers who drink Heineken drink it because of its popularity, while 8% drink it because of the prestige associated with the brand. Interestingly 5% of beer consumers selected specific brands because they were perceived as healthy. This was particularly the case for Guinness Stout and other Stouts. The figure below highlights the dominant reasons influencing brand selection in the Nigerian beer market.

Table 3b: Factors Influencing Beer Brand Selection in Nigeria

Source: Firmus Research

Do Nigerians Always Stick to the Same Brand of Beer?

The answer is mainly yes. 60% of beer consumers will always stick to their brand of choice and not be easily convinced to switch. The remaining 40% can switch, though 18% have a habit of always buying the same brand. The primary reason for sticking to a brand is taste; about 40% of consumers decide based on the product’s taste. Equally, some brands have become the personal favorite of some consumers; 40% of consumers will not shift because of this sentiment. About 2.5% of consumers stay with a beer brand because it is affordable, emphasizing the minimal effect of price on beer brand selection. For those who will easily switch brands, the primary reason (over 50%) is that they want to try the numerous options or varieties in the market.

Where Do Consumers Mostly Buy Beer in Nigeria?

Beer is such a social drink that on-trade drinking (78%) far surpasses off-trade drinking (22%). On-trade refers to purchases in social venues like pubs and restaurants where consumers purchase and consume on-premises. Off-trade activities involve purchases made in supermarkets, shopping malls, and convenience stores for home consumption. The chart below presents the specific percentages for different purchase points.

Source: Firmus Research

What to Expect in the Nigerian Beer Market

In the medium to long term, Beer is expected to maintain its market dominance though it is expected to lose some of its market share to Spirits. However, demand will stabilize as economic conditions stabilize.

REFERENCES

1. https://www.quora.com/Why-is-beer-more-popular-than-other-alcohols ↑

2. https://www.fao.org/faostat/en/#data/FBSH ↑

3. https://www.fao.org/faostat/en/#data/FBSH ↑

4. https://www.reportlinker.com/clp/country/87/726344 ↑

5. Nigeria’s Alcoholic Beverages Industry | Asoko Insight ↑

6. https://www.thedrinkshop.com.ng/product/gulder-can33cl/ ↑

7. Naira to US dollar conversions are based on conversion rates in December 2024 on Google Finance. ↑

8. https://www.thedrinkshop.com.ng/product/hunters-dry-nrb33cl/ ↑

Also read on how much Nigerians spend on Alcohol