In 2023, the state of the economy had a significant effect on wine, as it did on most other categories of alcoholic beverages. Volume sales decreased as a result of lower consumer spending brought on by high fuel prices and the local currency’s depreciation, according to the report.
It was observed that as most wine brands are imported, the devaluation of the local currency had a significant effect on wine pricing, resulting in a significant rise in average unit prices.
The most popular type of alcoholic wine is red wine, whose sales are hampered by inflationary conditions and growing costs. Many consumers are first exposed to wine through the inexpensive Don Simon and Baron Romero red wine brands, which are typically less expensive than white wine variations.
The attractive aspects of the fourth-largest economy in Africa, including its growing population, rising social trends, and growing health consciousness, are contributing to the expansion of wine exports to the nation.
Wine is imported by Nigeria from South Africa, Spain, Italy, and Brazil. Nigeria, which lacks adequate soil and favorable weather for its development, does not grow it domestically.
According to the authors of the Euromonitor research, “wine is a relatively niche category in Nigeria that is growing from a low base, due to the growing desire for novel types of alcoholic drinks among Nigerians and an increase in the female drinking population.”
Wine is usually drunk in social settings like clubs and parties. However, wine used to sell for between N2,000 and N5,000, but now its price has more than doubled.
According to Victor Ikem, a wine merchant in Lagos, the majority of imported wines are purchased in foreign currencies and have increased in price as a result of the dollar shortage.
“The exchange rate increased to as high as N1,000 to the dollar by the end of the year and is currently exchanging for over N1,500 in July 2024, from around N500 to one dollar in mid-year 2023,” he continued.
Ikem claims that this has had a significant impact on consumers’ ability to purchase the majority of goods, including wines and spirits, and that the cost of imports has increased. “This has also made it harder for importers to ship bigger quantities, which has led to a shortage of some well-known brands.”
The foreign exchange regulation was liberalized last year, which resulted in the naira weakening from 463.4/$ to 1,586/$ as of August 22, 2024. The value of the naira dropped to $1,610 on the black market.
Between June and December of last year, the FX reform also resulted in four exchange rate adjustments for cargo clearance at the country’s seaports. The rate went from N422.30/$1 to N952/$1. As a result, importers had to pay higher import duties in order to have their goods cleared.
Comité Champagne, a trade group that monitors the quantity and value of French exports, reports that the amount of champagne imported into the nation decreased by 53.2 percent to 302,141 bottles in 2023 from 646,036 bottles in 2022.
Babatunde Odumeru, managing director of Brand Finance Nigeria, stated that “the decline in the value of the naira affected the purchasing power of consumers, making them buy less luxury products like champagne.”
The Federal Government measures, which included the withdrawal of the gasoline subsidy and the devaluation of the naira, are largely to blame for the acceleration of inflation to a record high over the past year in the most populous country in Africa.
According to the National Bureau of Statistics, the nation’s headline inflation rate increased to 33.40 percent in July from 34.19 percent the month before.
According to Uchenna Uzo, a marketing lecturer at Lagos Business School, “wine production has dropped in Nigeria because energy prices have been going up, hence the cost of generating energy used to run the machinery for producing wine has increased, especially diesel.”
“The high rate of inflation has not resulted in a decrease in the cost of raw materials.” People shifted to importation, particularly from nearby African nations, when they realized it was less expensive to do so than to create, he said.
He claimed that while there is still a significant consumer base and possibilities for exports, wine production will increase due of the high level of demand.
Uzo continued, “There are many wine varieties that we can’t produce on this side of the world, which limits the options we have for wine production. Talent is required for wine production.”
