REVIVING BENDEL BREWERY……By Pastor Osagie Ize-Iyamu.

It is sad that despite the huge unprecedented revenue that has accrued to the Edo State government in the past seven years which totals over one trillion Naira (FAC and IGR combined) the State is still in debt and no visible or serious effort has been made to develop the industrial base of the state. Mr. Peter Obi former Governor of Anambra State without the noise and fanfare characteristic of many governors executed and commissioned landmark projects in his State, initiated viable economic projects and still left over N75 billion in the coffers of the State as take off capital for the new administration. Can we expect this worthy example to be replicated in Edo State as the countdown to a new administration begins? In this post we shall attempt to draw attention to one among several of our ailing assets with the hope that government can channel some of her funds to its revival.
Bendel Brewery was established in 1971 by the Mid-Western Government headed by General Samuel Ogbemudia and was first known as BAUWL Brewery. It had an initial installed capacity of 100,000.00 hectolitres per annum. The Brewery was commissioned on 1st October, 1974 but did not commence production of Henninger beer until April 1975. It was launched as Crystal beer in 1976 after the brand Henninger failed to hit its expected target. Under the new name, the brand flourished. It is important to note that for many years the Brewery recorded substantial profits and paid dividends to the State Government. The Success of Prof. Alli’s government from 1979 to 1983 was greatly enhanced by the financial contribution from Bendel Brewery. The Brewery apart from employing a lot of Edo people through direct and indirect engagements also brought prosperity to many of its customers who made brisk business selling the very popular Crystal beer.

On November 25th 1992, the State Government headed by Chief Odigie Oyegun signed an agreement with Churchgate Industries for the Privatisation of Bendel Brewery appointing same as investor/Manager. The Equity Share holding structure was as follows: Churchgate: 51% Edo State Government: 25% Other Nigerians: 10% Workers Trust: 5% totaling 100%. The Privatisation agreement with Churchgate Industries which was meant to enhance the production capacity of the brewery while ensuring efficiency and good return on investment became the death knell of the once thriving brewery. The brewery reopened in 1994 producing Crystal Classic Beer and Crystal Malt and making profit but with no dividends or sometimes unsatisfactorily low dividends being paid to the State Government.

In 1999 a new Government under the leadership of Chief Lucky Igbinedion was elected. The low dividends and the lopsided agreement made the State Government to repossess the Brewery and threw Churchgate out in 2001. The government, dissatisfied with the fortunes of the brewery instituted an enquiry into how it was privatised (the terms of agreement) and discovered that there was no record of financial payment to Edo State government from Churchgate industries for the 51% majority Shares they acquired of Bendel Brewery. Secondly, the agreement by Churchgate industries to massively invest in the brewery by way of additional and more efficient equipment was not fulfilled. Thirdly, all the profits were being remitted abroad under the guise of ordering for equipment which never came. Fourthly and more worrisome, the company was notorious for asset stripping of the brewery to aid, support and expand her affiliate companies. Nine months later, after a lot of pleading, Churchgate was allowed back only for them to continue in their old ways. Little wonder therefore that in 2003 the Government finally sacked Churchgate and tried to operate the factory on its own. This was a difficult task as Churchgate had already stripped the brewery of some of its essential equipment. The state government had to provide funds to enable the then General Manager Chief Osaro Idah with some other officials to proceed to Germany to get replacement for the stripped assets especially the Pasteurizer and filler equipment. Delays in supply, installation and synchronization of the equipment led to delay in production and consequently poor revenue generation. Thereafter production picked up. The abandoned Admin building in the brewery premises was completed and commissioned by Chief Lucky Igbinedion during this period.

In 2006 the factory was almost grinding to a halt because Churchgate sued the State government and this disrupted activities in the company while scaring away potential investors. The State Government in 2007-2008 under Prof. Osunbor commendably brought in funds and a new management team to revamp the brewery. Unfortunately, the funds brought by Prof. Osunbor were insufficient to turn around the fortunes of the brewery and the government was short-lived. The promise of additional funds to operate could not materialize because the new administration led by Comrade Adams Oshiomhole saw no need for it. The factory had to produce on Zero working capital (producing only on the good will of suppliers and customers) until July 2014 when still under the government of Comrade Adams Oshiomhole the factory finally shut down as a result of accumulating debt. The total debt profile according to management as at May 2013 was N1, 989, 055, 970.59. This amount would by now have risen slightly due to interest rates and continuous overhead such as Salaries and Electricity Bills. The government must however be appreciated for assisting the brewery to transfer its debt with the defunct intercontinental bank to AMCON.

This debt profile should not scare government or potential investors because if properly funded and managed, the brewery is capable of liquidating its debt in a very short period. Clear examples can be seen from the following: The brewery produces 10 tanks of beer and it is ready for sale in 21 days, at about 41,000,000.00 naira and sells at about N126, 000,000.00 with a gross profit of N85, 000,000.00 which is well over 200%. In the same light, 1 tank of malt is produced and ready for sale in 3 days at about N32, 000,000.00 and sells at about N88, 000,000.00 with a gross profit of N56, 000,000.00 which is 175%. To crown it all, both products are produced currently on separate production lines. There is hardly any business where such figures are possible in Nigeria today. The overhead costs can certainly not swallow these profits as can be seen from the past records. Besides, Bendel Brewery can run Crystal Water on a different line with only the filling equipment and packaging now needed.
It will be necessary to renovate the production areas to meet the Food Production Area Standards stipulated by NAFDAC. Engineers need to crosscheck if all the equipment are still available or if they have been vandalised as reported to the police last month and the functionality of the equipment that are still on ground. No doubt many of the equipment would have to be overhauled, replaced and upgraded.

Besides the above, it must be clear that for a proper take off, enough working capital must be provided to procure materials in sufficient quantities to cover at least two months production period. It would be advisable to convert the old Generator and Boiler from Diesel to Gas. Provision should therefore be made to connect the Brewery to the Nigerian Gas supply Company by piping. Laboratory Equipment and other miscellaneous expenditure must also be taken into consideration. Edo State government should not abandon the brewery or leave it to rot but must take concrete steps to revive it, invite investors and experts to assess the facilities and engage them in a Public Private Partnership (PPP) arrangement that would be mutually beneficial to all. This is the way to go. #TheFutureIsNowREVIVING BENDEL BREWERY……By Pastor Osagie Ize-Iyamu.

It is sad that despite the huge unprecedented revenue that has accrued to the Edo State government in the past seven years which totals over one trillion Naira (FAC and IGR combined) the State is still in debt and no visible or serious effort has been made to develop the industrial base of the state. Mr. Peter Obi former Governor of Anambra State without the noise and fanfare characteristic of many governors executed and commissioned landmark projects in his State, initiated viable economic projects and still left over N75 billion in the coffers of the State as take off capital for the new administration. Can we expect this worthy example to be replicated in Edo State as the countdown to a new administration begins? In this post we shall attempt to draw attention to one among several of our ailing assets with the hope that government can channel some of her funds to its revival.
Bendel Brewery was established in 1971 by the Mid-Western Government headed by General Samuel Ogbemudia and was first known as BAUWL Brewery. It had an initial installed capacity of 100,000.00 hectolitres per annum. The Brewery was commissioned on 1st October, 1974 but did not commence production of Henninger beer until April 1975. It was launched as Crystal beer in 1976 after the brand Henninger failed to hit its expected target. Under the new name, the brand flourished. It is important to note that for many years the Brewery recorded substantial profits and paid dividends to the State Government. The Success of Prof. Alli’s government from 1979 to 1983 was greatly enhanced by the financial contribution from Bendel Brewery. The Brewery apart from employing a lot of Edo people through direct and indirect engagements also brought prosperity to many of its customers who made brisk business selling the very popular Crystal beer.

On November 25th 1992, the State Government headed by Chief Odigie Oyegun signed an agreement with Churchgate Industries for the Privatisation of Bendel Brewery appointing same as investor/Manager. The Equity Share holding structure was as follows: Churchgate: 51% Edo State Government: 25% Other Nigerians: 10% Workers Trust: 5% totaling 100%. The Privatisation agreement with Churchgate Industries which was meant to enhance the production capacity of the brewery while ensuring efficiency and good return on investment became the death knell of the once thriving brewery. The brewery reopened in 1994 producing Crystal Classic Beer and Crystal Malt and making profit but with no dividends or sometimes unsatisfactorily low dividends being paid to the State Government.

In 1999 a new Government under the leadership of Chief Lucky Igbinedion was elected. The low dividends and the lopsided agreement made the State Government to repossess the Brewery and threw Churchgate out in 2001. The government, dissatisfied with the fortunes of the brewery instituted an enquiry into how it was privatised (the terms of agreement) and discovered that there was no record of financial payment to Edo State government from Churchgate industries for the 51% majority Shares they acquired of Bendel Brewery. Secondly, the agreement by Churchgate industries to massively invest in the brewery by way of additional and more efficient equipment was not fulfilled. Thirdly, all the profits were being remitted abroad under the guise of ordering for equipment which never came. Fourthly and more worrisome, the company was notorious for asset stripping of the brewery to aid, support and expand her affiliate companies. Nine months later, after a lot of pleading, Churchgate was allowed back only for them to continue in their old ways. Little wonder therefore that in 2003 the Government finally sacked Churchgate and tried to operate the factory on its own. This was a difficult task as Churchgate had already stripped the brewery of some of its essential equipment. The state government had to provide funds to enable the then General Manager Chief Osaro Idah with some other officials to proceed to Germany to get replacement for the stripped assets especially the Pasteurizer and filler equipment. Delays in supply, installation and synchronization of the equipment led to delay in production and consequently poor revenue generation. Thereafter production picked up. The abandoned Admin building in the brewery premises was completed and commissioned by Chief Lucky Igbinedion during this period.

In 2006 the factory was almost grinding to a halt because Churchgate sued the State government and this disrupted activities in the company while scaring away potential investors. The State Government in 2007-2008 under Prof. Osunbor commendably brought in funds and a new management team to revamp the brewery. Unfortunately, the funds brought by Prof. Osunbor were insufficient to turn around the fortunes of the brewery and the government was short-lived. The promise of additional funds to operate could not materialize because the new administration led by Comrade Adams Oshiomhole saw no need for it. The factory had to produce on Zero working capital (producing only on the good will of suppliers and customers) until July 2014 when still under the government of Comrade Adams Oshiomhole the factory finally shut down as a result of accumulating debt. The total debt profile according to management as at May 2013 was N1, 989, 055, 970.59. This amount would by now have risen slightly due to interest rates and continuous overhead such as Salaries and Electricity Bills. The government must however be appreciated for assisting the brewery to transfer its debt with the defunct intercontinental bank to AMCON.

This debt profile should not scare government or potential investors because if properly funded and managed, the brewery is capable of liquidating its debt in a very short period. Clear examples can be seen from the following: The brewery produces 10 tanks of beer and it is ready for sale in 21 days, at about 41,000,000.00 naira and sells at about N126, 000,000.00 with a gross profit of N85, 000,000.00 which is well over 200%. In the same light, 1 tank of malt is produced and ready for sale in 3 days at about N32, 000,000.00 and sells at about N88, 000,000.00 with a gross profit of N56, 000,000.00 which is 175%. To crown it all, both products are produced currently on separate production lines. There is hardly any business where such figures are possible in Nigeria today. The overhead costs can certainly not swallow these profits as can be seen from the past records. Besides, Bendel Brewery can run Crystal Water on a different line with only the filling equipment and packaging now needed.
It will be necessary to renovate the production areas to meet the Food Production Area Standards stipulated by NAFDAC. Engineers need to crosscheck if all the equipment are still available or if they have been vandalised as reported to the police last month and the functionality of the equipment that are still on ground. No doubt many of the equipment would have to be overhauled, replaced and upgraded.

Besides the above, it must be clear that for a proper take off, enough working capital must be provided to procure materials in sufficient quantities to cover at least two months production period. It would be advisable to convert the old Generator and Boiler from Diesel to Gas. Provision should therefore be made to connect the Brewery to the Nigerian Gas supply Company by piping. Laboratory Equipment and other miscellaneous expenditure must also be taken into consideration. Edo State government should not abandon the brewery or leave it to rot but must take concrete steps to revive it, invite investors and experts to assess the facilities and engage them in a Public Private Partnership (PPP) arrangement that would be mutually beneficial to all. This is the way to go. #TheFutureIsNow

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