Peter Ndegwa is the Managing Director/Chief Executive Officer of Guinness Nigeria Plc. He speaks on the future of the company and its commitment to serving the Nigerian market. STANLEY OPARA was there
Nigeria is said to be on the path of growth after its exit from economic recession. Has Guinness Nigeria seen any improvement in its business so far?
Certainly, there is no doubt that a number of areas have improved. First is the availability of liquidity on the foreign currency side especially for manufacturers who import raw materials and spare parts for our plants. We have seen some level of stability both in terms of the expected range of price versus the volatility we have seen in the currency before. That is good because it improves predictability, ability to plan and even when costs are higher it helps such that we know what the price is, which is key. The second is the availability of gas. About 12 months ago, we had fluctuations in the availability of natural gas that we use to power our plants. When we had shortages, we had to go into the use of diesel, which is more expensive, less environmentally-friendly and more erratic. Previously, we had incredible delays in getting work permits or travel permits. However, in these areas, we have seen some level of improvements. Areas I feel we could improve further are the congestions at the seaports. Our exports have doubled in the last 18 months and one of the reasons why we are doubling exports is to get foreign currency, which is very helpful for us. But we have seen some level of delays as a result of the congestions at the ports, both in terms of outbound and inbound of raw materials. As a result, two things happen to the business eventually, we incur demurrage and more transport costs and also when we don’t get the materials on time, it is challenging to ensure continuity of production. However, it is good to see that government is focusing on infrastructure, where it is obviously going to spend more.
In Nigeria’s brewery space, Guinness is considered a strong advocate of responsible drinking. What is driving this focus?
Guinness, no doubt, is a brand that is known for quality and it has been in Nigeria for 67 years. So, for us, it goes beyond just alcohol. The whole issue of alcohol in the society, and in particular, our response to the drinking agenda, is very important to us. While our commercial interest, investment and paying dividends and returns to shareholders are very important, success for us is more than the commercial aspect. Reputation, trust and respect are also very important. What consumers, customers and society think about us is a big part of what makes us successful. As leaders in the alcohol industry, we want to make sure that we also lead the agenda in raising awareness about responsible drinking with stakeholders, not just consumers but communities, suppliers and the public. Alcohol has been part of the society for a long time and has been used in celebration for many centuries; but if it is misused, it can cause harm, which is the primary basis of all the messaging on the responsible drinking campaigns that we do. The other context is at global level. Diageo, our parent company, is part of the global producers and marketers of alcohol. The CEOs of global companies that produce alcohol came together and made a commitment that across the countries they operate, they will ensure that they focus on efforts that reduce the harmful use of alcohol. So, as a part of Diageo, the activities that we take part in locally are part of that bigger commitment and global collective. Also in Nigeria, we are part of the Beer Sectoral Group for beer and spirits. We are also part of the Spirits and Wine Association of Nigeria, and we work with these groups to tackle alcohol misuse.
In this respect, what are your programmes for Nigeria?
In this regard, the firm’s programme I would like to mention is the Ember Months campaign carried out in partnership with the Federal Road Safety Corps across the country. It’s a responsible drinking campaign that is targeted at commercial drivers and motorists, especially those using public transport. It aims to help them to understand the importance of not drinking when driving or about to drive. This year so far, we have launched one of the ‘Ember Months’ campaign in Agege Motor Park here in Lagos and we will also be launching in other parts of the country, including Abuja, Kano, Benin and Onitsha, just to sensitise the commercial drivers on the risks of harmful misuse of alcohol especially when driving. We have partnered the FRSC for the past 13 years on this campaign. In 2015, we gave them breathalysers to enable them test drivers and this also provides a way to check that our education/awareness initiatives are working.
Secondly, this year, we are starting a radio programme where we will be giving a lot of information about responsible drinking, making people aware of the various elements of responsible drinking, for example how they shouldn’t drink if driving and how much alcohol is permitted in your body according to regulation. Our overall message to drivers is ‘Don’t Drink and Drive’ and we have mostly focused on this campaign around the ember months. However, from 2018 we have decided to extend it through the year, from January to December. This is because accidents don’t just happen towards the end of the year, and drinking doesn’t stop at the end of the festive season, it goes throughout the year.
Thirdly, for the first time ever, we will be organising structured trainings for new driver’s license applicants and fleet drivers across the country and this plays well into our education piece for responsible drinking.
Some reports have suggested that issues around underage drinking may be more prevalent in developing countries. Does this worry you in any way?
As part of the global CEOs commitment, one of the areas we focus on is underage drinking. We need to make sure that young people understand the dangers of alcohol misuse from when they are younger rather than when they have already started to engage in drinking. We have a programme called “Smashed” which has been running in Diageo for about nine years. We are going to launch the programme in Nigeria in 2018. We will work with an agency to run this in schools, using drama to educate young people about the dangers of excessive drinking so that they understand what alcohol abuse means from the time they are young and understand the harmful impact this may have. We believe by doing this and doing it in an interesting way, in an environment where they are comfortable, they will respond to the message on the dangers of alcohol misuse.
The second thing we are doing is to look for advocates within youth communities. We recently signed a partnership with the National Youth Service Corps and we use that platform to recruit responsible drinking ambassadors among the corp members who are then tasked with spreading the message of responsible drinking in their communities and places of primary assignment. These ambassadors will be chosen and trained to influence their colleagues not to engage in alcohol in harmful ways.
No doubt, Guinness Nigeria is a going concern, and will remain in this market for as long as possible. What are your targets?
Despite the challenges we have been seeing in the environment, we continue to grow our business. How have we been able to grow our business? We have invested in our production capacity to produce spirits locally and today we are producing Smirnoff, Gordons, and McDowells locally instead of importing. We are not only saving the country some foreign currencies, but this is also allowing us to price these brands at the right price so that consumers can afford them. Our investment in spirit shows that we are committed to the future.
The second is we have also increased our local sourcing. We used to source about 40 per cent locally, now we are sourcing about 75 per cent locally, materials like sorghum, glass, packaging materials like labels and crown corks. This reduces our cost of doing business.
Innovation continues to be a core part of our business and we have come to be known as the business that innovates. One aspect of that is our spirits innovation. However, we have also expanded our participation in some of the other categories including beer and soft drinks. We are the only total beverage business which has spirits, beer and soft drinks, giving us a bit more opportunity to service consumers, compared to if we were specialists in a particular area.
It is about expanding our portfolio through innovation and through building existing brands. It is about lowering our costs both through local sourcing and locally produced brands instead of importing. We also continue to drive our productivity agenda, which is all about reducing waste and being more effective. Finally, it is being close to the consumer in terms of the way we go to market our products, and being better distributed.
How do you carry along your vast network of suppliers, vendors, wholesalers, retailers, among others, in the bid to realise the Guinness’ business philosophy
Soon, we will be launching an initiative called Join the Pact. This is a global initiative that Diageo introduced over nine years ago. It is a global initiative for people to make a pledge not to drink and drive. Working with our trade partners and at every touch point where our brands are consumed and enjoyed, this will cut right across all our external stakeholder groups.
We aim to collect 100,000 pledges from Nigerians not to drink and drive. When you drink, don’t drive. When you go out in a group to have fun, designate one of you to drive and that person should not drink. If you are going out alone, arrange for taxi to take you home after you have had something to drink. We have a global online initiative, the DRINKiQ, which has been refreshed.
The Drink IQ is just about increasing the knowledge we have about alcohol. The Drink IQ website, www.DRINKiQ.com was first introduced in 2008 when Diageo led the industry in launching a responsible drinking website. Information on questions such as, what should I know about alcohol?; how is alcohol harmful to my body?; how much alcohol should I drink?, are made available on this website. The website has now been refreshed, it is now much more engaging and more user friendly and consumers can actually teach themselves.
Like they say, ‘charity begins at home’, so our members of staff also have access to it. Very soon, it will be extended to professional bodies and at the end of the day it is about increasing awareness on alcohol.
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