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Beer War - the Blame Game Continues(AllAfrica Via Acquire Media NewsEdge) The sustained advertisement campaign by an advocacy group, the Consumer Rights Advocacy Network of Nigeria (CRANN), against a leading beer manufacturer accused of arm-twisting distributors to shun products of another operator will do more damage to the brewery industry, which is still grappling with falling demand, reports Festus Akanbi For those who have watched Beer Wars, a 2009 documentary about the American beer industry, the prevailing scenario in the Nigerian brewery industry will easily pass for the second part of the documentary film. In particular, Beer Wars covers the differences between large corporate breweries, namely Anheuser-Busch, the Miller Brewing Company, and the Coors Brewing Company opposed to smaller breweries like Dogfish Head Brewery, Stone Brewing Co., and other producers of craft beer. Also covered is how advertising and lobbyists are used to control the beer market, implying that these things harm competition and consumer choice. Throughout the film, there is a theme that the smallest breweries have next to no chance to compete due to the sheer volume of advertising and outdated beer distribution laws. Like other sectors of the economy, the Nigerian brewery industry has continued to witness a free flow of investments especially by the two leading operators, namely the Nigerian Breweries Plc and Guinness Nigeria Plc. It is no longer a secret that the two firms are locked in a breath-taking competition. The Jostle for Beer Market In the past two months or thereabout, the healthy competition hitherto existing between these two giant breweries appeared to be giving way to a smearing campaign by a third force which industry analysts said may make nonsense of the modest achievements recorded by industry operators over the years. In order to gain and maintain market share in the face of the falling purchasing power of the Nigerian beer consumers, the brewery giants have continued to increasingly adopt products innovation, packaging and branding, pricing differentiations, distribution models and channels, strategic global alliances, market segmentation, adverts and sponsorship. What the Nigerian economy has benefitted from the competition for market share is the huge foreign investments which the brewery sector has attracted through international alliances. Earlier this year, Heineken NV, the world's third-biggest brewer, said it planned to merge its two units in Nigeria, pooling the country's industry leader with the number three beer maker. Nigerian Breweries Plc and Consolidated Breweries Plc will combine to become more efficient, Amsterdam-based Heineken said in a statement earlier in the year. The Dutch company holds 54.1 per cent of the Nigerian Breweries, whose brands include Heineken and Star, and 53.8 per cent of Consolidated, the maker of beers such as Turbo King. The combination is "based on a significant and compelling strategic rationale" and will allow the companies to tap growth in sub-Saharan Africa's second-largest beer market, Heineken said. Benefits will come from economies of scale such as combined purchasing of raw materials or deliveries, it said. Not very long ago, Heineken acquired 54 per cent shares of Nigerian Breweries and subsequently invested more than $500 million (about N77.5 billion) in the company. On the other hand, in 2012, Guinness Nigeria, the local unit of Diageo Plc revealed that its on-going drive to expand its operations had seen it invest $225 million (N55.billion), into its Ogba and Benin breweries. Analysts see these investments as positive competition, which are bound to benefit Nigerian consumers at the end of the day. The Blame Game However, as economic reality continues to restrict the purchasing power of the Nigerian consumers, with a corresponding restriction in their choices, the brewery sector has not been spared as sales figures have continued to tumble. The next thing to expect is for the affected companies to look for justifications for the fall in performances as shareholders continue to push for better returns on their investments. For some weeks running, a group known as the Consumer Rights Advocacy Network of Nigeria has taken position in the media by alleging that a prominent brewery had embarked on campaigns of de-marketing rivals by offering major distributors incentives so as not to stock products from other firms. The Coordinator of the group, Mr. Shina Loremikan, said the trend had led to situations where only the products of the company in question were the only ones available in the market in many locations across the country. According to him, this forces consumers to patronise only the company's brands of beer and malt drinks, which may ordinarily not have been their first choice. Loremikan said: "We hereby call on all the relevant agencies of government, including the Consumer Protection Council and the National Competitiveness Council of Nigeria to rise up to the challenge of ensuring an even playing ground for all corporate players in the sector. "There is need for fairness in marketing practices, which is predicated on allowing industry players in the alcoholic beverage sector to be able to play on a level ground according to the same rules and on equal terms." He added that the trend had been on for about two years but that the recent development was a drive towards knocking the opposition out of business. To strengthen its allegation, the group has funded series of public advocacy newspaper adverts where it is accusing 'a major player' in the Nigerian brewery industry of indulging in 'unethical marketing practices' which it claimed are anti-fair play in the brewery market. In the advertising series, CRANN screams complaints of 'pirate marketing' and 'demarketing' by the brewery its accusing fingers is pointed, adding that the said brewery is deliberately frustrating a rival brewery's efforts to sell its products in the market. In the 'masked campaign,'CRANN created a rather dramatic scenario between two beer bottles, one big, and the other small. CRANN branded the big bottle (the accused brewery), 'SURULERE', and the small bottle (its client) 'OGBA' and convinced itself it has masked the campaign. However, marketing analysts said it is easy to unveil the combatants in the emerging brewery wars to include the Nigerian Breweries, which is the major player with its head office in the Surulere axis and Guinness Nigeria located in Ogba area of Lagos. Faulty Argument A Lagos-based marketing scholar/analyst, Friday Emeka, who faulted CRANN's argument, wondered why an advocacy group which supposed to fight for the right of Nigerian consumers has decided to pitch its tent with one of the competing companies in the brewery sector. Emeka said, assuming CRANN is right in its accusation of one brewery of devising marketing strategies that are leading to disappearance of its competitors' products and brands from the stands, the development, according him is not a crime in marketing, adding that granting juicy incentives to sales outlets for preferential product displays and sales by brands is not new trend or strategy in the marketing world. He said, "NGOs are known to be courageous advocates of good governance, best practices (business and governance), good corporate responsibility, and responsible citizenship among other social virtues. A situation where an NGO, which is supposed to be fighting on behalf of the common good of the general public, is the one in the boxing ring, wearing the gloves of a competitor in a corporate tournament, the industry, regulators and the general public need to look elsewhere for credible advocates in defence of the rights and privileges." Watchers of the unfolding drama wondered why the media campaign coincided with the declined performance of a party in the emerging war. It is also on record that the Managing Director of Guinness Nigeria, Mr. Seni Adetu, made a subtle reference to the impact of an alleged demarketing by a competitor as one of the reasons for the company's recent performance. In a response to a question on the alleged demarketing activities in the brewery industry, Adetu admitted in an interview published in a Lagos-based tabloid that such practices were taking place. "I have heard that a particular company actually does that, unfortunately in this market we don't have a strong anti-trust policies that will deal with issues like that. In some other countries, no company is allowed to go out to the market to delist another company's brand. I think it is something that the government will do well to look at as a neutral regulator. From my perspective it is clearly the wrong thing to do in service of creating a fair competitive environment in this country." The allegation was coming on the heels of a fall in the price of Guinness shares as investors reacted to the company's dividend payment for its 2013 financial year. Commenting on the results, Adetu said revenue and profit declined due to pricing disadvantage, growth in the value segment where the company is a relatively small player, competitor's aggressive trade practices and increased financing costs. Adetu, however, sees some upside going forward as the company's innovations begin to yield positive results. Analysts, who dismissed CRANN's allegations, argued that it is disingenuous for any party in the competition to cry foul when it has not been able to press any criminal charges against anybody. "If the basis of CRANN's complaint is the fact that a competitor is aggressively pushing its products to the market, thereby intimidating other competing firms, then the allegation lacks merit. "The hallmark of a good business climate is competition and every organisation is at liberty to stay on top as long as it is not flouting any known law," one analyst explained. While faulting CRANN's position further, Emeka explained that the concepts of demarketing and pirate marketing alluded to by the advocacy group did not fit into the scenario it created. According to him, "While 'demarketing' can be described as a proactive and innovative marketing strategy by an organisation to reposition a brand or product due to, dwindling ability to meet demand for such product or brand, 'pirate marketing' on the other hand happens when marketers employ the limitless opportunity of the virtual space (internet, social media, e-mails) to market their products unsolicited to consumers. None of the marketing concepts has correlation to the scenario CRANN described in its adverts." Copyright This Day. Distributed by AllAfrica Global Media (allAfrica.com). |