Economy Slowdown: Nigeria Economic Slowdown Hits Guinness Nigeria's Sales as Beer Industry Suffered
The economic slowdown in African regions has affected the sales of Guinness Nigeria, the country's second-biggest brewer. This economic slowdown is believed to be an impact of the global economy slowdown, whereas markets have tumbled from China, Japan, and the U.S, as well as other parts of the world.
According to Bloomberg, Guinness Nigeria Plc reported that their net income declined up to 66 percent in the second half-year profit of 2015. The brewer's income fell to 1.2 billion naira ($6 million) up to December. In addition to that, revenue is also reported to drop 10 percent to 49.8 billion naira.
The fall also happened to Guinness Nigeria's shares, which are reported to close at 115.50 at the capital city Lagos on January 29. The shares are down up to 4 percent this year.
The decline was not only seen in Guinness Nigeria in particular. The country's biggest brewer Nigerian Breweries Plc which is partly owned by Heineken NV saw even a steeper decline. Their shares are reported to fall by 26 percent this year. This suggests that weaker economy is affecting not a particular company, but the beer industry in general, and even other industries in Nigeria.
Nigeria is believed to be having a hard time managing the economy despite being considered as Africa's largest economy. Business Insider reported that Nigeria has asked for a $3.5 billion loan from the World Bank and African Development. The request was believed to be the authorities' response as the country grapples with a $15 billion budget deficit due to the oil crash, whereas the prices fall about 70 percent in just a year and a half. This did a lot of damage to Nigeria, which produces about 1.8 million barrels of oil per day with oil contributed to 35 percent of its GDP.
In addition to global economic slowdown and oil crash, Nigeria also particularly suffered from terrorist group Boko Haram, which also costs the government a lot of money, as reported by Fair Observer. Drought and extreme weather including El Nino is also worsening the economic situation in many parts of Africa.
The substantial drop in Guinness Nigeria's doesn't only reflect the declining of beer consumption, but also the country's suffering economy and industries in general. The country's economic slowdown is believed to be a product of a hurting combination of slowing economic slowdown that leads to the declining of exports from Nigeria, global oil price crashes, and internal conflict with terrorist groups, also bad weather conditions.