Guinness Speaks On Plans To Exit Nigeria,”We Recorded N19bn Losses”

Guinness Nigeria

Mr. John Musunga, Chief Executive Officer of Guinness Nigeria Plc, has said unambiguously that the business has no plans to depart Nigeria, but rather is increasing capital investments and growing production capacity in the nation.

Musunga made this statement yesterday during a press conference in Lagos to discuss some of the company’s new operational tactics for selling its products in Nigeria in the wake of the country’s crippling foreign exchange scarcity.

He said: “We have no intention now, or in the future, to exit from Nigeria market. We are delighted with the opportunities Nigerian consumers are giving to our brands. They consume our brands and we want to continue to deliver value to them.

“We have a robust research and development (R&D) that will continue to give us what the taste preference, needs, aspirations of our Nigerian consumers are. And with that in mind we craft products that meet those needs.”

He said that Guinness Nigeria has just acquired 25 acres of land in Ikeja industrial area in line with its expansion plan, and as recently as last week the company took delivery of new equipment that were brought to expand their spirit capacity having identified huge opportunities in Nigeria that we could tap into and expand substantially.

He said: “To demonstrate that we are keen to remain in Nigeria, our new water recapture plants in Lagos and Benin cost millions of dollars. These state of the art facilities are expensive but our intention is to continue demonstrating as a business that we are thinking sustainability.

“You will also see the new equipment that we brought in last week to expand our spirit capacity having identified huge opportunities in our consumer products that our mainstream business here in Nigeria could tap into and expand substantially. We are bringing in additional capacity that will allow us to expand. We are going to commission that equipment next year (2024) to scale up.

“We have also acquired new 25 acres of land here in Lagos for further expansion. We want to demonstrate as a business that we are not exiting Nigeria otherwise we will not be making huge investments like those I have explained to expand and serve our customers better.”

Musunga said that the recent announcement made by the company on the marketing of its imported finished products is to enable Guinness Nigeria to concentrate on products that it is manufacturing locally in Nigeria by creating a new company that would be charged with the importation and distribution of the finished spirit products in Nigeria.

According to him, these imported brands represented 6.0 per cent of Guinness Nigeria’s turnover and consumed nearly 15 per cent of its foreign exchange budget.

He said: “Last week you heard that we made announcement that Diageo, which is our mother company that owns more than 58 per cent of Guinness Nigeria, made a decision to change the way we distribute our imported spirits, because we have quite a bit that we make locally.

“And the reason is that all those imported spirit products come as finished products and, therefore, demand quite a bit of capital expenditure for procurement.

“When the President Tinubu announced new policies that resulted in currency devaluation, we were carrying huge foreign exchange exposure that we have to revalue, which removed us from very healthy profit position which we were going to report in June. If that announcement had been made on July 1, we would have made quite a bit of profit. But because it was made in June and our year closes in June we made N19 billion loss because of that revaluation.

“We do not want to carry forward that kind of exposure whereby we increase our foreign exchange exposure in our balance sheet and in our profit and loss account.

“By being very tactful of how we move these imported spirits around, it will free Guinness Nigeria to utilise the foreign exchange that we earn from our business and the little that we receive from the government to buying raw materials that we use to manufacture. That is one of the big motivations for that change.”

He said that while “we are doing this, we creating two different enterprises in Nigeria: Guinness Nigeria remains as it is but the Diageo, the mother company, is committed to introducing a new organisation in Nigeria to be selling these imported spirits.

“We are not moving away from spirits. We are just adjusting the way we market our foreign spirits brands in Nigeria.

“The expectation from the business is that we will see hopefully in the coming future two businesses that will be growing and more adept and attuned to the market and hopefully free us from foreign exchange situation.

“As a business we will always have to look at our strategies and review them in the light of market dynamics.”

He also expressed confidence that the measures the government has taken will bear fruits. “We will be worried in the short term for sure as we feel the pain now. But if we stabilise our currency and government use the money it removed in subsidy and invest it in development the ultimate beneficiary will be the consumers in Nigeria and manufacturers like us that will have enough consumers,” Musunga said.

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