The unbridled influx of foreign wines, spirit and other alcoholic beverages into the country is threatening the local industry. LAYI ADELOYE writes on operators' push for survival
Local distillers and blenders of wines, spirit and other liquors are worried stiff that their industry investment of over N280bn is being threatened by the influx of cheap foreign brands in the Nigerian market.
According to the latest Manufacturers Association of Nigeria's compendium on manufacturing activities in Nigeria, local distilling and blending subsector constitutes 40 per cent of the manufacturing sector's strength of N700bn value.
According to the local blenders and distillers of wines, spirit and other liquors, the local industry's main source of worry comes from dumping, which robs the Federal Government of revenues in duties and taxes, as well as spoil the market through cheap prices.
The local operators recently brought their concern to the fore, alerting the government to this development and its many implications. Operating under the auspices of the Distillers and Blenders Association/ Sectoral Group of the Manufacturers Association of Nigeria, the group alerted the Federal government to the worrisome trend in the unbridled influx of foreign wines and spirit, which mostly come in through unregulated routes via smuggling.
The group said if the trend was not checked on time, local liquor and wines manufacturing segment of the economy risked collapse, with the attendant effect of throwing 1.8million workers into the employment market.
A survey of the market presented by the local operators reveals, "These foreign wines and spirits brands enter into the country's market through the nation's porous borders without being registered with relevant regulatory agencies of government."
Indeed, the threat has forced collaboration among all stakeholders in the industry. At a joint press conference organised by the sector operators in collaboration with representatives of the Nigeria Labour Congress, National Union of Food, Beverage and Tobacco Employees and the Association of Food, Beverage and Tobacco Employers on the state of the sector recently in Lagos, the Executive Secretary of the association, Mr. Fatai Odesile, said the latest development in the country called for a greater introspection and concerted efforts on the part of all, including the Federal Government, to check the impending economic catastrophe in the land.
According to him, over 650 different brands of foreign wines and spirit enter the country yearly, with many of them smuggled and of substandard quality. In recent times, he said, there had been massive illegal importations of wines and spirits into the country from regions and countries, like South Africa, Asia, India and Europe, among others.
He said, "Specifically, the illegal influx of alcoholic beverages, wines and spirits into the country is an ominous wind that will blow nobody any good at the end of the day. Today, Nigeria market has become a dump yard for all manner of products regularly smuggled into the country without anybody raising eyebrows.
Apparently pushed to the wall, the operators have embarked on some initiatives aimed at bring succour to their operations and investment. To start with, the group said it would enlist the support of the Federal Government and its regulatory/enforcement agencies, like the National Agency for Food and Drug Administration and Control, the Standards Organisation of Nigeria, the Nigerian Customs Service, supervisory ministries and the Nigeria Police Force in the fight against illegal importation of the foreign brands of alcoholic beverages, wines and spirits.
For instance, he said, as a group of local investors, the sector had contributed so much to the growth of the nation's Gross Domestic Product, which it was determined to protect.
"We have done this through regular payment of taxes and other statutory fees, and even carry out corporate social responsibility. We have created jobs for over 150,000 people in our various companies. We still remain committed and faithful to the realisation of the country's becoming a centre of economy," he said.
The Chairman of FOBTOB, Tunde Abdulrahman, also raised the alarm on the serious danger posed by smuggled spirits, particularly with respect to job losses, recalling that similar events that led to the death of several promising industries in Nigeria, such as textile, batteries and tyres, among others.
Consequently, he called on the Federal Government to, as a matter of urgency, abrogate the legislation that allows unrestricted importation of alcoholic beverages, wines and spirits. He said any interested investor attracted by the potential in the Nigerian market should come and set up manufacturing facilities in Nigeria to create more employment, rather than engaging in activities that can rob the nation of its economic prosperity, with the real threat of massive job losses.
On his part, the National President of National Union of Food, Beverages and Tobacco Employees, Oyelekan Lateef, known for his vibrancy and consistency as an advocate of official government policies, said a good policy would effectively checkmate smuggling, stressing that an outright ban on the importation of all food, beverage, wine and spirit products into Nigeria might not be enough without effective implementation, to fight smugglers.
This, according to him, will enhance local production, and invariably encourage and protect local and international investment. "It is envisaged that this measure will boost job creation while existing jobs shall be preserved," he said.
He stressed that any threat to the existence of the food and beverage industry would impact the industry's economic and social contribution to the overall economy.
He said, "The industry employs over 125,000 Nigerians directly in factories and employs another 1,800,000 Nigerians indirectly. If we assume that for every employed Nigerian there are, at least, five dependants, the livelihood of over five million people depend on the well being of our industry.
"The industry accounts for 40 per cent of the Nigerian manufacturing industry output, estimated at N700bn. The manufacturing sector contributed a little less than five to the Gross Domestic Product and our industry accounts for about 40 per cent of that figure. The estimated contribution of our industry in terms of corporate tax and VAT is approximately N40bn per annum."
Commenting on the ongoing trend's impact on the nation's international investment outlook, he said market capitalisation of top 10 listed companies in the food industry stood at N2.17tn in December 2012, adding that, "The major companies in the industry have been the ones stabilising the Nigerian Stock Exchange, even during the financial crisis."
