Nigeria develops thirst for wine

The value of Nigeria's wine industry is expected to reach US$370 million by 2015, as Nigerians develop a thirst for high end wine and spirits, as reported on thedrinksbusiness.com. "Many global luxury brands have entered the Nigerian market, including several well known spirits and Champagne brands, which are being embraced by the country's affluent consumers,” said Sue Birch of Wines of South Africa. 

With a wine market currently valued at US$300m a year, volume sales in Nigeria are expected to grow by 6% a year, with red wine accounting for 74% of sales. WOSA is keen to tap into this growth: "We know anecdotally from a number producers that there is a robust appetite for premium and high-end South African wines in Nigeria," Birch said. South African wine exports to Nigeria grew by 12% for the 12 months to March 2012.

"Europe holds the lion's share of the Nigerian market with 60% of volumes sales, but South Africa is the next biggest player with a 22% by volume share," said Sapta Bhattacharyya, associate vice president of global research company Aranca. Bhattacharyya estimates that 5.2m people, representing the top 10% of earners among the 156m population, account for 43% of wine consumption in the country. "This is the group to target," he said.

With most economic activity taking place in Nigeria's key cities of Lagos, Abuja, Kano, Kaduna, Onitsha and Port Harcourt, potential wine markets are being identified and developed with luxury hotels and restaurants catering to the affluent consumers in these areas. All of WOSA's marketing efforts will be concentrated on the south, non-Muslim regions of the country. Home to the second largest economy in Africa, Nigeria will be the world's fourth most populous nation by 2050.

LVMH profit boosted by wine and spirits

The world's largest luxury goods group, LVMH, reported a 1% rise in 2011 net profit this week, as the company continues to show strong growth in its wine and spirits division, despite economic uncertainty in Europe. As reported on the drinks business, the group’s net profit topped €3 billion as sales jumped 16% last year, driven mainly by spending in Asia. "I'm going to be a bit repetitive because 2011 was an excellent year like 2010, and like I hope 2012 will be," said chief executive Bernard Arnault.

"After an exceptional 2011, LVMH is well-equipped to continue its growth momentum across all divisions in 2012. Its strategy will remain focused on developing brands through strong innovation, quality and expansion in high potential markets," he added. The French group’s portfolio includes Champagne brands Dom Pérignon, Krug, Veuve Clicquot and Moët & Chandon, Château d’Yquem in Sauternes, and Château Cheval Blanc in St Emilion. It also owns Glenmorangie and Ardbeg whiskies, and Belvedere vodka.

LVMH's robust performance sets high expectations for the luxury goods industry. "It's somewhat of a paradox to say that 2011 was a year of global prosperity, but we are lucky to export most of our products," Arnault said. The company’s latest figures show that the European debt crisis hasn't triggered a slowdown in the US. In the fourth quarter, sales in Europe rose 3%, but the strongest growth came from the US and Asia, excluding Japan.

Arnault doesn't see an end to LVMH's good fortune. "Barring a major accident and despite the difficulties in Europe, the world economy is growing and the world wants more and more of our products," he said. The company’s fashion division, which includes brands such as Louis Vuitton, Bulgari and Dior, also showed strong growth.

Robert Joseph interview

Wine and the City talks to wine writer Robert Joseph at The Drinks Business' annual conference, about the so-called 'new consumer', the UK's yo-yo discounting trend, and why premium wine should stay in heavy bottles.