Heineken will sell its interest in Nigerian brewer Champion Breweries to EnjoyCorp, a local holding company. The Dutch brewer, which will still majority own the market-leading Nigerian Breweries, will sell The Raysun Nigeria Company Limited, which owned an 86.5% stake in Uyo-based Champion Breweries.
Heineken Nigeria reported its worst February in 15 years as a result of cash shortages caused by the Central Bank pulling banknotes from circulation as well as escalating costs and pressure on consumer spending caused by the sharp depreciation of the Naira.
Heineken has said that it will allow “greater focus” on its core business in Nigeria. In 2023, sales volumes for Heineken in Nigeria fell “in the high teens”. Nigeria, as well as Vietnam, have accounted for 60% of Heineken’s global beer volume decline of 4.7% in 2023. Heineken owns 56.7% of the largest beer company in Nigeria, Nigerian Breweries.
More broadly, Heineken’s acquisition of southern African cider, wine and spriits company Distell has given the company the opportunity to focus on higher margin product categories in African and non-African markets alike. Heineken’s push beyond beer in African markets is also mirrored by Diageo’s moves to reduce its dependence on beer and, in its case, its underperforming East African markets.
Heineken’s pain in Nigeria is reflective of an ongoing challenge for multinationals as to whether to ride out the current currency crisis, exit or form a joint venture that reduces operational burden and exposure in Africa’s largest market. This week South African billionaire Christo Wiese, the former chairman of South African supermarket chain Shoprite (which sold up and exited Nigeria in 2021), reiterated that he thoughts multinationals would not be able to ignore Nigeria for long.
The Nigerian government knows this and the challenges for multinationals open up opportunities for local investors who don’t need to repatriate profits and keep distant shareholders happy. Champion Breweries is being sold to EnjoyCorp, which we believe is a vehicle for venture capitalist Ehimare (Eric) Idiahi. Idiahi is a cofounder of Verod Capital, a VC firm that has investments in the Medplus pharmacy chain, fitness chain CardinalStone, Niyya Food and Drinks Company and apparel and cosmetics retailer Africa Lifestyle Limited (ALL).
Indeed, the misfortune of multinationals arguably is putting assets up for sale on the cheap, the most notable example being the sale of P&G’s $250m Agbara diaper factory outside Lagos, which was sold to major distributor Fouani Brothers. In February 2024 the Nigerian government imposed a mandatory annual levy for organisations employing expatriate workers. The new rules require them to pay $15,000 for a director and $10,000 for other employees. Ostensibly, the move is meant to encourage foreign companies to employ more Nigerian workers. In practice, it will hasten the exit of businesses where significant additional costs prove to be a dealbreaker. There are an estimated 150,000 expatriate workers in Nigeria.
