Guinness Nigeria acquires exclusive distribution rights to Diageo’s premium spirits in Nigeria
Guinness Nigeria Plc announced on Monday that it has acquired exclusive distribution rights to the International Premium Spirits (IPS) brands of Diageo’s Nigerian operations.
Diageo is Guinness Nigeria’s parent with a majority shareholding of 54.3 percent in Guinness stocks and with an expressed intent to increase its stake to 70 percent.
Guinness also said it would take over various assets including the current inventory of Diageo Brands Nigeria Limited, the wholly-owned Diageo business which currently distributes and markets the IPS brands in Nigeria. The consideration for the transaction is approximately N2.35bn. The transaction is expected to be concluded by 31 December 2015 and the new distribution agreement for the IPS brands will become effective on 1 January 2016 subject to receiving all regulatory approvals.
Diageo Spirit’s business in Nigeria includes Johnny Walker labels, Baileys, Smirnoff Vodka, Gordons, Tanqueray, among others. In the year ended 30 June 2015, Diageo International Premium Spirits net sales in Nigeria were €20 million.
Guinness Premium Stout (Guinness Foreign Extra Stout), which is the company’s flagship brand and money maker, has seen its sales slide in recent years as consumer preference shifts to herbal drinks, spirits and cheaper brands. To counter the shift in consumer taste, Guinness launched Orijin bitters in 2014 which was largely well received but not enough to reverse the slide in profit. In recent weeks, the company has launched a new drink, Guinness Africa Special, which is a mix of Guinness Premium Stout and African herbs and fruits. It is still too early to know the effects on sales and profit.
In a statement put out by the company, the Managing Director of Guinness Nigeria Plc said that “The transaction we are announcing today will facilitate the achievement of our ambition to create the best performing, most trusted and respected consumer products company in Nigeria by leveraging the strength of our unparalleled portfolio of beer, adult premium non-alcoholic drinks (APNADs), ready-to-drink (RTDs) as well as spirits.
“The integration of Diageo IPS brands with Guinness Nigeria brand portfolio best fits our strategy of filling the gap in our total beverage alcohol portfolio, and allows us to compete across segments within the market.”