Lower Oil Prices Could Dent Beer Consumption In Nigeria – SABMiller

Lower Oil Prices Could Dent Beer Consumption In Nigeria – SABMiller

By Andres Martinez | From Bloomberg

SABMiller Plc (SAB) expects beer volume growth to decelerate in Nigeria this year as lower oil prices dent consumption and African markets become more competitive, said Mark Bowman, managing director of the brewer’s Africa unit.

The company, which has forecast beer volume growth in Nigeria of about 8 percent a year, may see that rate slow to 3 percent or 4 percent, Bowman said in an interview in Davos.

“These are normally bumps along the road,” he said. “On balance, we see things getting back to trend.”

Oil prices have fallen more than 50 percent in the past year, threatening growth in Nigeria ahead of presidential elections next month. The nation, home to more than 175 million people, is the largest oil producer in Africa. SABMiller also expects to raise prices in the country, in line with what its rivals are doing, Bowman said.

For SABMiller, Africa is a bigger source of revenue than Europe, Asia or North America, making the company especially sensitive to upheaval there. The London-based brewer also is shoring up its nonalcoholic business in the region. SABMiller teamed up with Coca-Cola Co. (KO), the world’s largest beverage company, to create the biggest Coke bottler on the continent.

As it expands, SABMiller would be interested in strengthening its partnership with French drinks company Groupe Castel, Bowman said. The executive said he doesn’t foresee a change in the relationship with Castel soon, though.

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“We don’t expect anything to change in short to medium term,” Bowman said. “Over time, if opportunities arise, we would look at them.”

Read more at Bloomberg