Diageo targets £230m push at African sales

Published on Friday 15 April 2011 12:40

DRINKS giant Diageo will invest £230 million in expanding its capacity in Nigeria this year as sales across the African continent have doubled to £1.3 billion in the past five years.

Overall, Diageo has invested 400m in its African business in recent years in an effort to capture a fast-growing market, where spirit brands such as Johnnie Walker and Bell's speak to the aspirations of a burgeoning middle class.

Nick Blazquez, the Scotland-raised president of Diageo Africa, told Scotland on Sunday that there was a vast gulf between the myth and reality of African consumer markets, where news headlines are dominated by armed violence in Libya and Ivory Coast. He said the truth is that GDP growth in Africa is set to outstrip the Asian region by 2015.

"From a drinks industry perspective there will be an additional 100 million people who are going to come of legal drinking age. Plus you have got favourable GDP growth. The correlation between consumption of branded products and GDP is very close. More people with more money means the market is going to grow.

"Sure, there is corruption in parts and there are some major issues (in some countries] with a lack of access to safe drinking water. However, in addition to that, there is also a very vibrant economy and culture."

Beer is Diageo's largest seller across the 40 African nations in which the firm operates, making up 75 per cent of sales.

This is in contrast to the rest of the world, where Diageo predominantly sells spirits.

African sales are dominated by Guinness, the group's oldest brand in the marketplace, as well as locally developed products which serve to offer African consumers a range of price points.

Guinness was first shipped to Sierra Leone in 1827 and is now produced for local markets in some of the group's 14 African breweries. Diageo's first brewery to be set up outside the British Isles was in Nigeria in 1963.

But Blazquez said whisky is set to be a major growth area. Diageo Africa sells about 2.5 million cases of whisky a year, with Johnnie Walker among the preferred brands.

"South Africa is very significant for us, but actually growth in West Africa - Nigeria, Cameroon, Ghana - is even faster.

"More consumers have got disposable income and we see this rapidly evolving middle class. I expect Scotch sales to accelerate in Africa."

Blazquez proudly pointed to the way Diageo uses technology to market its products in Africa, with the most automated operation in the group worldwide. Diageo's African sales force grew by 400 in the past year recruited from local communities.

Africa now accounts for 13 per cent of the group's global sales and is among its fastest growing emerging markets. Diageo Africa employs 6,000 people, about 25 per cent of the group's total global workforce.

Blazquez said: "In any emerging market there are challenges. It (Africa] has additional challenges around infrastructure - water, power, road transport. But there are ways round it. It costs you more - it costs more to brew a pint of Guinness in Nigeria than it does in Ireland. But it doesn't stifle us."