Guinness Nigeria Targets Cheaper Beer in Bid to Return to Growth

Guinness Nigeria Plc (GUINNESS), the west African nation’s second-largest brewer, is expanding its offering of lower-priced beers to arrest sliding profit amid a slowdown in consumer spending in Africa’s biggest economy.

The unit of London-based Diageo Plc (DGE) has started sales of the new Dubic lager brand, which costs less than the company’s flagship Guinness stout, Chief Executive Officer Seni Adetu said in an interview with Bloomberg TV Africa’s Boason Omofaye at the World Economic Forum in the capital, Abuja. The brewer also plans to improve distribution in Africa’s most populous nation by making its drinks available in more outlets.

“One area we are disadvantaged versus our competitors is in terms of our play in the value segment,” Adetu said. “That’s an area where historically Guinness Nigeria has not played in. We are Guinness -- we tend to be more of a premium brands company. It’s now we are getting our footprint in the value sector.”

Guinness Nigeria net income declined 22 percent to 5.9 billion naira ($36.6 million) in the nine months through March, and revenue also fell, the Lagos-based company said April 28. Nigerian drinkers are switching to cheaper brands after a fuel subsidy cut contributed to a downturn in discretionary incomes, according to Adetu. About 61 percent of Nigerians lived on less than a dollar a day in 2010, according to the most recent poverty survey by the country’s statistics agency.

A wave of deadly bomb attacks and kidnappings by the Islamist militant group Boko Haram in the northeast of the country and Abuja is contributing to lower beer sales as the threat of violence discourages people from drinking outside the home, Adetu said. Even so, the Nigerian market has high potential and Guinness has no plans to scale back investment.

“Consumption is below 10 liters of alcohol per adult -- in South Africa it’s in the mid 50s,” Adetu said. “Irrespective of what’s happening from a security standpoint in the north, there’s a lot more we can do as a sector to really grow our business.”

To contact the reporter on this story: John Bowker in Johannesburg at jbowker2@bloomberg.net

To contact the editors responsible for this story: Jacqueline Simmons at jackiem@bloomberg.net Kim McLaughlin, John Bowker

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