Anheuser-Busch InBev's Budweiser entrance puts Heineken on alert in Nigeria - CEO

Heineken's CEO has said Nigeria's premium beer market is on track for success despite pressure from value brands and the launch of Anheuser-Busch InBev's Budweiser.

Jean-Francois van Boxmeer admitted yesterday Heineken is facing tough challenges in Nigeria - one of the brewer's major international markets. A combination of factors, including the Budweiser launch and a weakened economy from oil price falls, has seen price pressure on the market leading Heineken lager. 

Van Boxmeer said problems have been compounded because while Heineken has taken pricing in Nigeria because of duty rises, A-B InBev, which launched Budweiser in the country in April, has not.

"Nigeria is a competitive pressure point with ABI," van Boxmeer said. "It is difficult. They are gearing up with capacity."

He continued: "And that in an environment where the purchasing power has not really improved yet. That brings people who are looking for value propositions."

Despite the headwinds, van Boxmeer said he remained confident in Heineken's position in Nigeria as the country's premium beer sector continued to grow. In yesterday's H1 results, Heineken's beer volumes in Nigeria fell mid single digits, but volumes growth for brand Heineken was up double digits.

"It is a market which is changing," van Boxmeer explained. "We don't know where to it will change, but it is also definitely a market where we are under pressure.... Long term, it remains a market, I think, with a lot of potential, but it needs also to have an improvement in the oil prices."

It is now two years since a devaluation of the Naira almost doubled the finance costs of Heineken's Nigerian subsidy, Nigerian Breweries. The devaluation, which knocked 40% off the currency, came amid an economic downturn fuelled by a drop in global oil prices. Heineken holds a 54% stake in Nigerian Breweries, which is the leading brewer in Nigeria.

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