‘Adulteration is killing distilleries business in Nigeria’

Fatai Odesile, Managing Director, Grand Oak Limited, has spent close to three decades in the nation’s Food and Drink sub sector of the economy, before his emergence as the MD, preside over Grand Oak.  In this interview with Olusola Bello, he spoke on a range of issues including the nation’s economy, wine and spirit market and counterfeiting. Excerpts:

What are the challenges in the Food and Drink sub sector of the economy?

The challenges are numerous; so from the economic point of view, we still need a stronger naira because what you will find is that a lot of the input materials, which are dependent on sourcing abroad are still proportionally higher than what we could pass on to the consumers.

How are the distillers coping with the challenges?

One of the ways is that we have been looking inwards; we look more inwards to cut down some inefficiency. Unfortunately and painfully, people are also part of these. It is all about looking at what is it that we can do to cut down time and at the same time identifying multi-skilled people. So, one sure way is to reduce unnecessarily overhead, and cut back on wastage.

One other challenge confronting the industry, which is more peculiar to the distilleries in the drink segment, is the problem of adulteration. You know, the entry barrier to distillery business is quite low.  The recycled bottle business has become a booming business today and its possible for some people to sit at the corner of their houses, manually apply cork, used label and package fake gin and masquerade it as the original.

That is one major problem that is confronting us and we have been collaborating with NAFDAC on this. Checkmating faking and adulteration is necessary because as brand owners, we owe it as a responsibility to protect the consumers.  Indeed, faking is killing businesses and driving marketing budget up.

Based on that, we constantly have to communicate to the consumer to alert him/her; this is the new feature, watch out for the original, go for the original Seaman’s Schnapps and all of that. So, it is a lot of issue confronting the distilleries in particular that may not be as much with other drinks, such as beer, because of the return bottle scheme.

How would you assess consumer attitude in terms of products consumption and patronage?

Today’s consumers are much better informed; they are not carried away by the imported mentality hence there is a lot more focus on Nigerian-made goods. The attitude of today’s consumer is now driven by quality rather than foreign obsession. Today’s consumer wants to know: is this good for me irrespective of where it comes from. I think that we are beginning to see a much more rational consumer, a consumer that is not driven by geographical emotions but are driven by basic realities of time, quality and value. Value proposition is beginning to take the centre stage for most consumers of today rather than origin or colonial bias as we used to have.

What areas give you more challenge; Is it market penetration and patronage or meeting consumer needs and lifestyles with your brands?

For me, the major area of challenge is the value proposition. It is actually hitting the consumer at the core of his value need; getting the mix right and tailor-making the brand to the consumer. That gives a lot more challenge today because then you have a lot of pressing needs hitting that same consumer. You really need to get to the heart of his needs, determine what he wants, how he wants it, when he wants it rather than shooting in the dark.

The other challenge is that our people do play to the gallery at times. You have a focus group study; people do tell you what they want you to hear in a focus group. People who rarely consume certain brand in the house will tell you, I have a carton of it, I buy this and that; we realize the need to filter that to really get to who and what he does and when he does it and how he does it. So, to answer your question, data, and getting into the real heart of value proposition of a consumer in Nigeria is one of the challenges facing lot of business owners.

In recent times, promoters of beer have been educating Nigerians on the health benefits of beer due to the threat that your brands might pose to them. Has this not had negative impact on your sales in the last two years?

Well, you could not say that most things that are done are not impactful. If we look at it this way: look at the drink business in 2016 or 2017, and look at the situation in 2015, there is a clear difference.

Today, practically any brewery or any beer manufacturing company that is worth its salt is into distilleries too. If you look at Guinness, the company has been riding largely on spirits for a while now. So, what does that tell you? Spirit has become an attractive proposition no matter what the current perception may be.

Even from the economic point of view, if I want to host about 5 guys for instance, it pays me to just buy a bottle of Lord’s Dry Gin, put it on the table and four or five of us will enjoy ourselves. So, people are beginning, on their own, to realise the benefits of spirits; I mean, if you look at Diageo, what is the biggest aspect of Diageo business?

Yes, it is always good to campaign the benefits and all of that, but the consumer is also very smart and he is aware of the health benefits too. For instance, if you take a shot of Whiskey, no sugar and it burns your fat, it keeps you smarter and healthier. Of course, you will take a decision as to what to drink.

So, in respect to the safety campaign, we in the distillery subgroup of MAN have been in consultation with the beer group on how to support the initiative. That is, we are collaborating to run the safety campaigns, ‘don’t drink when you drive’ and all of that. We are doing that as stakeholders together with the promoters of beer brands to ensure that we enlighten the people and boost the effort of the Road Safety Unit.

If you look at all the creative materials that we produce here to push our numerous brands, you will notice ‘Drink responsibly and Not for anybody below 18 footnote’. It is a mandatory campaign that we are also running; in as much as we want to sell, we also want people to be safe.

How many brands do you have today in your products portfolio?

Today, we have about 12 brands, mostly household names. These include, Seaman’s Schnapps which has been there for decades, Lord’s Gin is also a premium brand that is today playing along the global brands. We have Regal Dry Gin, 9ja Café Rhum, a fantastic coffee Rhum which gives you the true taste of coffee extract.

We also have Apperito, Swagga, which are in various ranges. We have Dark Sailor Rum; Calypso Coconut Liquor that appeals to the youths, Super Crown Schnapps and Bacchus Tonic Wine. Then, we have a non-alcoholic drink called St Lauren.

The launch of Swagga in Akure a few years ago came with a manufacturing plant, but in less than three years, the plant is not functioning. Could this be as a result of the recession or the brand is not doing well in the market?

Let me start by stating that the Akure plant was not just meant for Swagga; it was a multi-purpose plant. Having said that; there is an economic of scale which is part of looking inwards through which we were able to establish that,  rather than have that plant in Akure, producing what Nigerian Distillery could actually take on – why do we need to fragment resources.  So, we discovered that Lagos facilities can take care of what is being done in Akure. The whole idea of the Akure plant was to actually grow into some other brands that are going to be in partnership with others. So, Swagga is still a growing brand including the Bitters category.

For drinks business, there are very distinct segments, you have the super premium, the premium, mainstream, and low end within the main stream, and you have the upper main stream, the lower mainstream, so each of these brands play in the appropriate segment.

Which brand is the flagship of the group?

Seaman’s Schnapps is the flagship of the business. If you look at the entire spirits in Nigeria, Seaman’s Schnapps remain the number one brand.

How has it been these two years since you assumed the headship of Grand Oak as chief executive officer?

It has been very interesting. You see, there is a world of difference between a passenger and the driver of a bus. These are two different things: you know some of those things that you will say; how I wish that you could have done it this way, when you sit on that seat and then you have the whole information, then you will appreciate those who sat on such seat earlier. I came in at a very turbulent period. Turbulence in both macro and micro; macro, we all knew about the global recession and then the recession in Nigeria.

In 2016 when I took over, practically everything was changing in the country; the finance guy would come and say oga, forex is now this and that. Then we could not pass on the increase to the consumers; meanwhile the shareholders were pressing for their returns. Also, the labour union had a 20% salary for junior and 16% for senior and all of that. We had to pay them. Internally, we also had some issues.

So, both internal and external issues all combined to present a tough situation.  Sincerely, the fact that I have been in the system for years, and have deep knowledge of the business helped me to sail through.  The fact that we are also very consumer focused and know our ways in Nigeria helped in navigating through the turbulence. But, the most important thing is that the staff believed in the leadership.