
16 Oct 2013 Diageo gives Guinness a makeover in booming African markets
The maker of Johnnie Walker whisky and Smirnoff vodka told an investment conference in London this week that it believes it can speed up expansion in Africa, where it has seen a compound annual growth rate of 13 per cent since 2007.
Despite recent concerns over a slowdown in the emerging markets, Diageo believes there is an “extraordinary opportunity” for growth in Africa over the long-term, as an additional 65 million people reach legal drinking age within the next decade.
The group has been working on a major re-branding of Guinness, which will be the single biggest campaign it has ever launched in Africa. The new, more modern brand and packs will be rolled out in Nigeria in the next few weeks before other countries such as Ghana, Cameroon and Kenya. Two years ago, Nigeria overtook Ireland as the biggest market for Guinness, which can be sold at up to double the price of a normal beer in Africa.
Diageo is hoping the re-brand will help Guinness to tap into a new generation of drinkers in Africa as competition on the continent also intensifies. Other beer and spirits companies including SABMiller, Heineken and Pernod Ricard are all seeking to take advantage of Africa’s growth rates over the next decade.
Guinness was first exported to the continent in 1827, to Sierra Leone, but there are now 13 breweries making the black beer across Africa. African Guinness, known as Guinness Foreign Extra Stout, has a higher alcohol content than the same beer brewed in Ireland – a hangover from the methods used to export it before the first Guinness brewery was built in Lagos in Nigeria in 1962.
Nick Blazquez, who oversees the region for Diageo, said growth rates in Africa will even outpace those witnessed in Asia over the past decade, as the continent’s population booms and more people join an emerging middle class. Six out of ten of the world’s fastest growing countries by GDP are in Africa.
“Today Africa is big for us and it’s big economies but if you project forward, it’s going to be even more significant,” Blazquez said. “Nigeria’s GDP [for example] will increase by a factor of ten times.”
Diageo’s sales in the region reached almost £1.5 billion last year. Africa is already the biggest source of beer sales for Diageo and Guinness accounts for some 45 per cent of its total beer volumes on the continent. The group also owns a string of local beer and spirits brands such as Senator Keg, Tusker and Serengeti lager…..