Guinness to focus on spirit brands as sales from beer capitulate

Guinness Nigeria seems to have thrown in the towel as the beer ‘war’ in the country becomes more intense.

After an unimpressive full-year result which saw the brewer’s net sales from its beer segment plummet as cash trapped consumers readjust their spending to value brands, Guinness Nigeria is set to drive its spirits expansion ahead of beer in the coming years while also focusing on segments it has a right to win namely Malta, Ready To Drinks (RTDs) brands.

Guinness currently has five brands in the beer segment namely, Guinness Stout, Harp, Satzenbreau, Harp and the newly launched Guinness Gold.

Figures from the released full-year 2019 result for the period ended 30th June show sales volume from its Lager and RTD category fell by 47.0percent year-on-year driven by lower sales of Satzenbrau and Harp, while the Diageo-owned brewer recorded marginal 2percent growth on its spirits year-on-year, malt grew 4percent year-on-year and stout grew 1percent year-on-year.

Until recently the beer market in Nigeria was a two-horse race between Diageo’s Guinness and Heineken’s Nigerian Breweries.

Guinness, known for leading brands such as Guinness Stout, Harp, just to mention few, while Nigerian Breweries has brands such as Star and Gulder were brands that graced the table, however, due to an age shift, the new generation of beer consumers who are between the ages of 21-35 years have moved away from stout to other brands.

Interestingly the battle in the beer market became more intense with the entrance of the World’s largest beer maker, AB In Bev into the market.

The year 2011 ushered in a disruption in the beer market with the arrival of SABMiller, which was then the world’s second-largest brewer, into the country, and its acquisition of majority shares in International Breweries Plc, makers of Trophy Beer, located in Ilesa, Osun-State.

However, in 2017, AB InBev acquired 72.17% of SABMiller’s shares in International Breweries Plc, in a series of transactions which resulted in AB InBev acquiring controlling interests in the company.

After the acquisition, a merger arrangement was later consummated with International Breweries Plc and two other local brewers: Intafact Beverages Limited, makers of Hero beer which is popular in the South-Eastern part of Nigeria, located in Onitsha Anambra State, and Pabod Breweries Limited, makers of Grand Lager, located in Port-Harcourt. All are now controlled by AB InBev.

In a swift response to AB InBev’s entry into the Nigerian market, Nigerian Breweries Plc also acquired breweries across the country. The company recently introduced the Tiger Beer brand into the Nigerian market. The brewer has also regiged some of its brands such as Trophy to meet consumers demand and also introduced Budweiser into the market on the eve of the last world cup.

Guinness has also bolstered its revenue base by leveraging its competitive advantage which is an array of spirit brands 13 in number and recently commenced the production of Baileys in Nigeria the first location outside of the UK.

 

OLUFIKAYO OWOEYE