While marketers in many countries are worried about a recession, there is also optimism regarding the business climate and marketing budgets.
Guinness Nigeria changes indicative of an evolving beverage market?
By our News Team | 2023
Forex challenges and the differing attitudes of younger African drinking-age consumers may be among factors driving new strategy.
Guinness Nigeria recently announced that, with effect from April 2024, it will no longer import or distribute certain Diageo international premium spirits products – including the Johnnie Walker and Singleton whisky brands and Baileys liquor brand – imported under its 2016 Sale & Distribution Agreement with Diageo plc, its London-based parent company.
According to a media statement, this move is in line with Guinness Nigeria’s long-term growth strategy and is also in alignment with Diageo plc’s decision to establish a new, wholly owned spirits-focussed business to manage the importation and distribution of its international premium spirits portfolio in West and Central Africa.
Photo credit: Benoit Larochelle via Wikimedia Commons
Currently, imported Diageo international premium spirit products constitute only around 6% of Guinness Nigeria’s total revenues.
Guinness Nigeria will continue to manufacture and distribute its full portfolio of non-alcoholic drinks, beer, ready-to-drink (RTDs) and locally produced spirits. These include Orijin, Captain Morgan Gold, Gordon’s Moringa, and Smirnoff X1 Choco.
The company says the change will enable Guinness Nigeria to better focus on its core business and its strength in the manufacturing, marketing and distribution of its local product portfolio.
Lingering foreign exchange scarcity
“This strategic change reduces [Guinness Nigeria’s] foreign exchange requirements and mitigates the negative impacts of lingering foreign exchange scarcity and exchange rate volatility on the financial performance of the company,” the media statement says.
Commenting on the announcement, the beverage industry news website, Just-drinks.com, says a number of African countries – including Kenya, Egypt, Zimbabwe, Nigeria, Ghana, Tanzania and Zambia – have struggled with US dollar liquidity shortages in recent times, which has caused an upsurge in import prices.
The website quotes David Harris, an alcoholic beverages research director at GlobalData, as saying: “With this, Diageo will be counting on growing moves towards spirits among younger African drinking-age consumers, who are increasingly seeking domestically-produced products which resonate with them, rather than imported western brands.”
“Despite Guinness’ ongoing popularity across Africa, we have seen a consistent shift away from unflavoured, traditional beer brands by younger consumers. Often viewed unfavourably as ‘your dad’s beer’, this move is a symbolic shift by Diageo away from the old and into a new era of targeting younger African drinkers with exciting African products.”
Comments Trendtype, the London-based emerging market consultancy: “It is notable that, in May 2023, Diageo completed the sale of its Guinness Cameroon business to Castel, which has far larger and wide-ranging brewing operations across West, Central and North Africa – but no footprint in Nigeria or Ghana.
“The big question is: does Diageo want to be running a brewing operation in Nigeria? We are not sure it does. Diageo HQ is streamlining its strategy in Africa to optimise spirits sales, which is less complicated, higher margin and fundamentally less problematic at the moment.”
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