- Title: NIGERIA: Guinness Nigeria targets rural market to boost revenue
- Date: 19th February 2013
- Summary: LAGOS, NIGERIA (RECENT) (REUTERS) ENTRANCE LEADING TO GUINNESS NIGERIA FACTORY WITH CAR DRIVING IN SIGN-POST READING: "GUINNESS NIGERIA PLC, WELCOME TO 2013" VARIOUS EXTERIOR OF GUINNESS NIGERIA FACTORY SMOKE COMING OUT OF PIPE INSIDE PRODUCTION FACTORY/ FILLED BOTTLES OF GUINNESS MOVING ON CONVEYOR BELT PRODUCTION LINE VARIOUS OF SENI ADETU, CHIEF EXECUTIVE OFFICER, GUINNESS NIGERIA PLC WORKING IN HIS OFFICE TABLE TOP CALENDAR (SOUNDBITE) (English) SENI ADETU, CHIEF EXECUTIVE OFFICER, GUINNESS NIGERIA PLC, SAYING: "We've seen some softening in the beer market but I think that's also partly to do with what has happened in terms of the discretionary income of the consumers. I think the last fuel subsidy removal has definitely impacted on the consumer's disposable income to the extent now, you know, a lot of their income is going on transportation and some going to pay for the inflation on housing and so on and so forth." VARIOUS OF BEER BREWING VARIOUS OF FILLED GUINNESS BOTTLES MOVING ON CONVEYOR BELT (SOUNDBITE) (English) SENI ADETU, CHIEF EXECUTIVE OFFICER, GUINNESS NIGERIA PLC, SAYING: "We've got a strategy in place to really expand our footprint into rural areas where like I said, we're not very present today as we should be, and if you did the market share comparison of urban versus rural, you would discover very quickly that we've got a much higher share in the urban area versus our national average and that explains why we need to do some more work in the rurals." VARIOUS OF BEER CRATES MOVING ON CONVEYOR BELT VARIOUS OF MACHINES LOADING CRATES OF BEER (SOUNDBITE) (English) SENI ADETU, CHIEF EXECUTIVE OFFICER, GUINNESS NIGERIA PLC, SAYING: "The truth is that there is no industry today that would claim that they have not been affected by that. I don't think that is limited to the beverage business and what we are doing is that we are working our way round this, we want to make sure that we are not competitively disadvantaged so to the extent that our competitors are there, we want to be there but also making sure that we don't put the lives of our employees at risk, one clever way that we are going about that is that we are working with local operators who understand the terrain very well and we're partnering with them, they run their depots and they can move around more easily than you know, people perhaps from other parts of the country." VARIOUS OF WORKER CONTROLLING PRODUCTION LINE COMPUTER PRODUCTION FACTORY
- Embargoed: 6th March 2013 12:00
- Keywords:
- Location: Nigeria
- Country: Nigeria
- Topics: Business,Economy
- Reuters ID: LVA2DMMNF67VKTCNZV3WFR1R521D
- Story Text: Nigeria's top beverage manufacturer, Guinness Nigeria PLC said on Monday (February 11) its first-half pre-tax profit to December 2012 declined by 15.71 percent to 9.44 billion naira, ($60.03 million) compared with 11.20 billion naira ($69.9 million) a year ago.
Guinness attributes this fall in revenue to reduced beer consumption.
The company, a unit of Diageo PLC in the United Kingdom is famous for brands like, Guinness extra smooth, Malta Guinness, Smirnoff Ice, foreign extra stout among others.
Seni Adetu took over the company's helm seven months ago as Chief Executive Officer, he blames the current decline in alcohol uptake on government reforms last year especially in the power and fuel sectors, that has resulted in higher electricity and petrol prices, reducing consumers' spending power.
"We've seen some softening in the beer market but I think that's also partly to do with what has happened in terms of the discretionary income of the consumers. I think the last fuel subsidy removal has definitely impacted on the consumer's disposable income to the extent now, you know, a lot of their income is going on transportation and some going to pay for the inflation on housing and so on and so forth," said Adetu.
Guinness Nigeria built its first brewery on the continent in Lagos, Nigeria's commercial capital in 1962.
The country of 160 million people, is the world's largest consumer of Guinness.
Motivated by a positive outlook for the future, Diageo will complete by November a 372 million US dollar brewery in the country to boost its beer production capacity in Africa's most populous nation by 50 percent.
The company is also banking on the National Bureau of Statistics figures which show that Nigeria's economy will grow at a speedy 6.75 percent this year, driven by progress in agriculture, banking and oil. The statistics office predicts the high inflation rate currently at 9 percent year-on-year in January from 12 percent in December, should ease slightly.
Whether this will translate into improved purchasing capacity for Guinness lovers remains to be seen. Even though the economy has been showing signs of growth, the gap between rich and poor is widening, unemployment is at 23 percent, while youth unemployment is double that and most people live on less than 2 US dollars a day.
However, in order to boost revenue Guinness Nigeria plans to press ahead with plans to tap into the rural areas where more than half the country's population lives.
"We've got a strategy in place to really expand our footprint into rural areas where like I said, we're not very present today as we should be, and if you did the market share comparison of urban versus rural, you would discover very quickly that we've got a much higher share in the urban area versus our national average and that explains why we need to do some more work in the rurals," he said.
The company has breweries in the South west and eastern parts of the country, but has none in the restive North.
Analysts warn that militant uprising in the area which intensified nearly two years ago, coupled with recent kidnapping of the seven foreign construction workers may undermine some investor sentiment.
But Adetu says insecurity notwithstanding, and to forestall the risk of being left behind by competitors, Guinness Nigeria PLC intends to access markets in northern Nigeria by partnering with local operators who understand the terrain.
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