After pumping N52 billion in capacity expansion about 10 years ago, Guinness Nigeria has recently invested N2 billion to expand its non-alcohol brands and offer value for 68,000 shareholders.
Speaking at a media parley in Lagos last Tuesday, Jacquelyne Yawa, head of agribusiness at Guinness, said the N52 billion signified the single largest investment of Diageo in any single market.
In her presentation, she said the brewer paid N14 billion in taxes to the government in 2019, which showed that it was a responsible organisation.
She disclosed the company sourced raw materials from local sorghum farmers, impacting the lives of over 30,000 of them in the process.
She further disclosed that more than 70 percent of Guinness’ raw materials were sourced locally, stressing that the company had created and supported over 180,000 jobs in the value chain.
“We are very proud to inform everyone that Guinness Nigeria is a trail blazer when it comes to corporate governance,” she said.
Guinness Nigeria, a subsidiary of Diageo, one of the world’s largest brewers, started ‘Grow with Nigeria’ initiative in 2019 to illustrate economic impact generated from local sourcing of inputs. It has benefitted 5,000 farmers directly in eight states, the company said in its newly launched ‘Sustainability Report 2018/19’.
The brewery industry is challenged by low spending power as unemployment and poverty weigh on consumer wallets. Many manufacturers are struggling as multiplicity of taxes, poor infrastructure and low access to cheap and long-term credit, among others, hurt them. Inflation has risen for the fifth straight month, hitting 12.13 percent in January 2020 from 11.98 percent in December 2019, according to data released by the National Bureau of Statistics last Tuesday. Food inflation accelerated to 14.85 percent from 14.67 percent.
“I do not think there is a competitive issue in the industry,” Stanley Njoroge, finance director, Guinness Nigeria, said.
“You have an environment that is inflationary, but government is increasing taxes. We agree that it is the responsibility of the government to raise revenue to provide for the people. The taxes are necessary, but it is about the quantum with which they are coming,” he said.
He stressed the need to push up the Nigerian economy to raise consumer spending and support local firms.
Colman Hanna, supply chain director, said inefficiencies at Lagos seaports was hurting the company and many other manufacturers.
He said it was easier to import containers from Europe to Nigeria than to move container from Ogba, Ikeja, to Apapa ports or vice versa. This, he said, raised production costs.
He cited a case where a 40-foot container, which cost the company N550,000 few weeks ago, now cost N730,000,pointing out the situation was hurting firms’ margins.
In 2018, the federal government raised excise duties for alcoholic beverages and tobacco.
In the new regime, beer and stout attracted N0.30k per centiliter (Cl) in 2018, N0.35k per Cl each in 2019 and 2020. Wines attracted N1.25k per Cl in 2018 and N1.50k per Cl each in 2019 and 2020, while N1.50k per Cl was approved for Spirits in 2018, N1.75k per Cl in 2019 and N2.00k per Cl in 2020.
Baker Magunda, managing director/CEO, Guinness Nigeria, said social instability in agricultural communities had been rife, stressing the need to reduce taxes and tariffs to support the company and, by extension, the brewery industry.
“Any time you punish the industry and it stops growing, it impacts a lot of people—those who work in the farms, suppliers, marketers and many others in the value chain,” he said.
“When taxes get to a point that it becomes punitive to the industry, and it stops growing, it impacts a lot of people,” he stressed.
He said the brewer was focusing more on spirit brands because they were the fastest growing segments in Africa.
He said the company’s strategy was to grow spirits faster, but stressed that the beer segment would not be neglected.
ODINAKA ANUDU
