SUBSIDY REMOVAL AND OPERATIONAL EFFICIENCY OF BREWING FIRMS IN ANAMBRA STATE, NIGERIA

Abstract

This study investigates the impact of subsidy removal on the operational efficiency of Brewing Firms in Anambra State, Nigeria. The study specifically, sought to ascertain the effect of changes in production cost on profit margins. Also to determine the pricing strategies on profit margins of Brewing Firms in Anambra State, Nigeria. The study is anchored on Cost-Volume-Profit (CVP) analysis developed by C. A. Parker in 1958.  The study employed descriptive survey research design and random sampling probability technique. The population of the study comprised 20 selected brewing firms operating in Anambra State, Nigreria. The sample size for the study consisted of 121 management staff members from the identified brewing firms.  Data were collected from a sample of 121 respondents with the aid of structured questionnaire.  Two hypotheses were raised and tested, using Multiple Regression Analysis of the Ordinary Least Squares (OLS) with the aid of Statistical Package for Social Sciences (SPSS, version 20). Findings revealed that there is a significant negative relationship between changes in production cost and profit margins with (β1 = -0.45, p < 0.01). Also, there is a positive significant relationship between pricing strategies and profit margins with (β2 = 0.38, p < 0.05). The study concluded that subsidy removal led to increased production costs and operational challenges, adversely affecting the profitability of brewing firms in Anambra State, Nigeria. The study recommended that brewing firms in Anambra State, Nigeria should adopt strategic pricing models that reflect changes in cost structures while enhancing production efficiency. Additionally, policies that foster market competition and reduce operational expenditures should be implemented to stabilize profit margins in the wake of subsidy removal