Guinness Nigeria recaps 2019 performance, lays out plans for the new year

Guinness Nigeria brands

Guinness Nigeria Plc has stated its must-dos in the new financial year which began in July to include: winning with a total beverage portfolio, strengthening and accelerating its premium core brands, winning in value and mainstream, innovating at scale to make new leads, building and constantly extending its route to consumer, driving out costs constantly to invest in growth and guaranteeing its plan with the right people and capabilities.

The company’s Managing Director/CEO, Mr Baker Magunda stated this at the firm’s Investor Conference held in Lagos recently.

Looking at the company’s performance in 2019, Mr Magunda said that the beverage firm’s focus areas had been to grow its premium core faster, which includes the reserve brands, international premium spirits, brand Guinness, mainstream spirits and Malta Guinness.

He noted that the company had two flanking efforts, the first was to transform the commercialization of innovation and the other was to deliver target cost absorption in lager and non-alcoholics driven by Dubic. And to accomplish this, it had to improve productivity by driving out costs and enabled advanced route-to-consumer.

Speaking on the macroeconomic environment and the challenges it posed for its business, the MD noted that while the company recorded modest quarterly revenue gains all through the year as well as the country seeing increase in Gross Domestic Product (GDP), the indices still fell behind population growth which made per capita income and consumer spending lower. With an inflation rate of between 11% – 11.4%, there was pressure on the cost of running the business, distribution with warehousing as higher prices cannot easily be passed on to consumers.

Beer market trends

Magunda said that the beer market throughout the year continued to see declines in both volume and value, with the mainstream and lower mainstream lager coming under increased pressure more so than the low-value brands. On a brighter note, the top end of the market otherwise known as the premium brand remained stable for the last eight quarters.

He noted that non-returnable PET and cans grew much faster, though they attract a much lower growth margin than the higher-margin returnable glass bottles, which was another pressure point for the company.

Despite the challenges, the MD said that the company will remain focused on its strategy, which is to grow value share and enhance its margins in beer occasions, winning with international premium spirits, growing mainstream spirits faster and continue to improve on its route-to-consumer.

Highlighting some of its achievements in the past year, he said that for the first time, Guinness brand went into a lager brand with the launch of Guinness Gold, a premium lager brand. It is a higher margin brand than other lagers that the company has in its portfolio and is consistent with its strategy to enhance margins in beer occasions. The company is seeing a good response from consumers since its launch, though the brand is currently being sold just in the Lagos market for now.

Magunda also proudly reported that Bailey’s Original, for the first time in the history of Guinness is now being produced locally.

White Walker, an extension of the Johnnie Walker range, was also launched last year.

Brand performance

The company said that the Guinness brand grew by 1% during the past year, partially driven by the newly launched Guinness Gold. Malta Guinness posted double-digit growth, which offset declines in non-alcoholic Dubic. All other non-alcoholics grew by 3%.

Mainstream spirits grew by 4%, driven by Orijin, Smirnoff X1 and Gordon’s which offset declines in Mr Dowells. Mr Dowells declined due to the changing of branding that took place last year. The company had about three to four months at the beginning of the year when no shipments were made.

The company also noted the successful introduction of Bailey’s Delight as well as Orijin Gin within the portfolio.

International premium spirits grew by 2%, with Scotch growing at double-digit, driven mainly by Johnnie Walker range of brands. There were also some declines in imported Gordon and Smirnoff as the company shifted towards local production.

The total contribution of spirits to the company’s revenue was 17%, a 1% decline from the previous year when it recorded 18% growth rate. Its target range is 25% to 30% in the foreseeable future.

The company saw its biggest decline in the lager segment, with Satzenbrau and Harp declining in the double digits. The company’s RTD was a mixed bag of performance, with Smirnoff Ice RTD actually growing double digits but declines coming from the Orijin RTD and Snap.

Overall revenue declined by 8% despite positive performance in the spirits segment. The growth in the Guinness, Adult Premium Non-Alcoholic Drinks (Apnads), MSS and International Premium Spirits (IPS) was not sufficient to cover the decline in the lager and the RTD category.

The company noted that one of the causes of the decline in operating profit was royalties and technical service fees which it accrued over the previous two financial years.

Leave a Reply

Your email address will not be published. Required fields are marked *