Guinness Nigeria Plc’s management refuted rumours that the company was considering leaving Nigeria, saying flatly that it was here to stay despite economic headwinds that negatively impacted its operations in the previous fiscal year. The company managed to persevere in the face of adversity.
Speaking to a select group of journalists during an interface and discussion session over the weekend at the company’s corporate headquarters in Ogba, Lagos, Managing Director/CEO Mr John Musunga led other members of the management team, such as Ayodele Alabi and the Company Secretary, Mr Rotimi Odusola, to assess the situation and update the public on some of the steps the massive brewery has taken.
The MD, Musunga, expressed excitement at the potential Nigeria presents to the company and its brands, adding that it is well-positioned to keep adding value for its throngs of satisfied clients.
“In particular, we are holding this interface on the back of the story of our announcement last week about our intention to change some of our products; hence the need for this clarification. First and foremost, we have been in the Nigerian market for 74 years, so we’re parts and parcel of the Nigerian economy and we have no intention whatsoever to exit the country,” he clarified.
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“We have a very robust Research and Development as part of our business as we continuously seek what they need, preferences, aspirations of the Nigerian consuming public. With that in mind, we will continue to meet those needs.”
He claims that Diageo, the parent firm that controls roughly 58% of Guinness Nigeria Plc, decided to alter how it distributes its spirits division, particularly its import division, which accounts for roughly 6% of its revenue.
“The reason for that is that the market demands quite a bit of capital procurement. We have quite a bit of inventory and we have to pay for inputs, which has led to huge debts between us and our current company. If you saw our results last year, when the president announced a new policy one of the biggest impacts was that it affected our bottomline. That currency devalued our balance sheets because we were carrying huge forex exposure. We had to revalue that and that moved us from a very healthy position if we were going to report before June if the announcement had been made on July 1. But because it was made in June and our year closes at the end of June, the impact due to that devaluation we recorded about N19billion losses. But when we saw the results of other companies, we realised that our own N19billion losses was not too bad because others made substantially large amounts in losses.
“Of course, we are not saying we are comfortable with that. So, we don’t want to carry forward that kind of situation of forex exposure in our balance sheets. That is why we’re being tactical about freeing ourselves from marketing our international spirits brands and rather use our forex to buy raw materials with the forex we receive from the government as well as our earnings instead of having to give it away again.”
“That was one of the key motivations for that decision. I think the second is that when you take away that spirit business and you’re left with this large beer business, you’re allowing both to co-exist. Guinness Nigeria Plc remains but Diageo has committed to register a company that will sell these spirits with a distribution model that will be more efficient and allow the movements of products. So, we’re not moving away from spirit business per se but just being strategic in the way we market our international spirit brands using expertise to market and produce those brands. So I think the expectations for the business is that we will see if hopefully in the coming future the two businesses will thrive independently. As a business, we always have to look at our business in the light of the market dynamics. Thankfully, the board ratified the resolution of the team to come up with a solution.”
Speaking about investment, Musunga and Odusola disclosed that the business has since expanded its ability to manufacture locally.
