in

Still on the beer matter , By ANDREW AGBESE

In my earlier piece on the plan by the Benue State Government to set up a brewery, I concentrated mainly on the factors that threaten the successful running of government owned enterprises to make the point that it is ill-advised.
This gave the impression that it is a well thought out idea which can be tackled with the right managerial skills.
But a more dispassionate look at the idea exposes even more dangers.
The best argument I have seen in support of the establishment of a brewery in Benue State is the one advanced by the brain behind the idea, the Managing Director of the Benue Investment and Property Company (BIPC), Dr. Raymond Asemakaha, who said it was to trap the huge amount being lost by way of capital flight to other companies which products are brought from other parts of the country and sold in the state.
BIPC
Benue Investment and Property Company, (BIPC), Dr. Raymond Asemakaha
Dr Asemaka puts the amount at least N850 million in a month. I have no reason to doubt the figure so let’s give him the benefit of doubt that is the amount actually spent on the consumption of alcohol monthly in Benue State.
This looks good on the surface, but on a closer look, the BIPC CEO we can agree, did not say the entire amount goes into the consumption of one beer brand as it is being mistaken by some who argue in its favour.
Currently, there are at least eight different popular beer brands in Nigeria alone that find their ways into the Benue market without hindrance. That means the N850 million only represents the gross of these sales combined.
It therefore follows that if each of these brands is to share in the market average per month, then what goes to each brand cannot be the N850 million being touted but the figure divided by eight which is roughly around N106 million per label.
Agreed that some of the labels could be from the same company so the average for a company that has two products in the Benue market, would amount to about N212 million.
When the Benue brand comes, it would be the ninth and competing with these brands that have been in the market for decades so there’s no way it can clinch the same share of the market size overnight.
But even if it does, with its promise to go into the market with one product, it can only rake in (as the ninth brand), only about N95 million in a month.
Juxtapose this with the hype of N850 million and see if the market is that tempting.
Let’s assume the proposed brewery comes out with the finest brew and beats the already existing brands to capture the market average of about N100 million in a month, after overheads and other running costs are deducted how much can it actually post as profit?
The other point in favour of building a brewery which ordinarily should have been a counterpoint, is the resort to invoking the name of Aper Aku to wit that since the respected leader and former governor started a brewery during his time, then it must be the right thing to do.
No doubt the set of governors of that era have proven to be more visionary and pragmatic.
But even at that they acted according to the realities of their time. Most of what the 2nd Republic governors were doing were borne out of the need to compete healthily with their peers as their precursors in the 1st Republic did with regional governments.
Chief Obafemi who was premier of the Western Region pioneered most of these ideas when his government built a university, broadcast station, commercial bank and other enterprises that went into businesses which led some regional governments to build cement plants, bottling companies, transport companies and others.
What the 2nd Republic governors did was to ‘domesticate’ those ideas in their states since the ones established by their preceding regional governments have by virtue of the unification decree become federal government property.
The Eastern Nigeria government was the first to establish a brewery, the Champions Brewery and later Golden Guinea with the respective state governments where they were domiciled taking over the facilities.
But by the turn of that decade, most state governments began to have a rethink over the idea and considered either going into partnership with private firms or abandoning them to die natural deaths.
In the case of the BBL commissioned during the Aper Aku administration and which commenced production in the year 1982, the company started floundering in the early 90s, due to factors which I enumerated in my earlier piece.
So, the active years of production can without fear of contradiction be put at about ten years.
Since I couldn’t lay my hands on what it cost the state government to build the plant or how much it was spending to keep it afloat and how much it realised before the machines stopped humming, I’ll pretend that all went well within the period it was producing.
But since I know that the state government is planning to sink a whopping N800 million minus overhead in a venture which life span, going by past experience may not go beyond ten years, I can’t pretend that all is well.
It is good to be optimistic but it is also better to learn from experience.
It is not by accident that the oldest and still thriving leader in the industry, Nigeria Brewery is not owned by the government and why this is so is not rocket science.

What do you think?

Written by Nike

Leave a Reply

Your email address will not be published. Required fields are marked *

GIPHY App Key not set. Please check settings

    Wade into Rivers political crisis, Bode George urges PDP elders, Tinubu

    NNPC/First E&P JV empowers NGOs with N53.4m