Home Analysis Investor s panic over ban on malt importation

Investor s panic over ban on malt importation

by Business News Report

Shareholders of breweries and other malt-based companies are now panicky over federal government’s announcement on the ban on malt importation, expected to take effect from January 1 next year.
This has reflected in the high rate at which holders of such securities have been offloading therr holdings at the stock market.
Last week, trading in the breweries sector accounted for 71 per cent of total trading at the exchange. Over 111 thousand shares of Guinness were sold while 113,504 shares of Nigerian Breweries Limited were sold within the week.
According to Mr. S. B. Olayemi, director of corporate finance, Rims Securities Limited, shareholders panic stem from the fear that profit margins of most breweries may drop considerably following the ban on malt importation.
He said that larger brand names like Gulder, Harp, Guinness and Star may be changed in line with change of contents and taste.

This may not go down well with many consumers who may resort to other forms of alcohol like palmwine. This he said will certainly bring down the profit margins of most breweries.
It would be recalled that the chairman of Cadbury Nigeria Ltd, Mr. Gamaniel Onosode at the company’s annual general meeting, AGM, warned of the adverse effects of the ban on importation of malt.
However, reports from the Nigerian Stock Exchange show that the demand for shares of such malt-based firms as Cadbury and Ovaltine have continued to outstrip supply.

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