Diageo sells majority stake in Guinness Nigeria to Singapore’s Tolaram


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Diageo is selling its majority shareholding in its subsidiary Guinness Nigeria, becoming the latest western company to scale down its presence in Africa’s most populous nation on the back of a long-running currency crisis and economic downturn.

The spirits giant will sell its 58 per cent stake in the Lagos-listed company to Singaporean conglomerate Tolaram for 81.60 Nigerian naira per share or about 103bn Nigerian naira ($70mn).

“The acquisition of Guinness Nigeria marks a pivotal moment in Tolaram’s journey of growth and diversification,” said Haresh Aswani, the group’s managing director in Africa. “We are thrilled to welcome a company with such a rich legacy and strong consumer loyalty into our ecosystem.”

Western consumer groups including Unilever, GSK and PZ Cussons have been retreating from Nigeria over the past year due to a chronic shortage of foreign exchange and a precipitous fall in the value of the local naira currency.

Tolaram, which has joint ventures with several leading consumer goods multinationals such as Kellanova and Colgate-Palmolive, is one of the largest consumer goods companies present in Africa, with combined investments of more than $1bn in Nigeria.

It is one of a growing number of largely non-western groups taking advantage of the retreat of their western competitors. Others, including Singapore-listed Olam and Turkey’s Hayat Kimya, continue to invest in Nigeria. Analysts say they provide the Nigerian market with cheaper alternatives and often have a higher risk appetite.

Diageo said it would retain ownership of the Guinness brand in the country, and continue to license it to Guinness Nigeria. Nigeria makes up between 1-2 per cent of Diageo’s global net sales value.

Bernstein analyst Trevor Stirling said the deal offered a resolution to the fact Diageo has been losing share in the mainstream beer market in Africa as it focused on Guinness and spirits. “Does this presage an eventual complete exit from beer in Africa?” he asked, pointing to the company’s sale of Guinness Cameroon to Castel in 2022.

The Nigerian subsidiary used to manufacture and distribute brands, including Baileys and Smirnoff, until Diageo and Guinness Nigeria terminated their international spirits license agreement last October so that Guinness Nigeria could focus on local brands such as Harp beer, Orijin and Captain Morgan Gold.

With fixed costs such as those for raw materials and other inventory mostly invoiced in dollars, companies have to pay with a plummeting currency that is one of the worst performing globally.

Foreign companies have also found it difficult to repatriate their revenues in recent years and a $7bn backlog owed by the central bank to business groups was only resolved in March.

Nigeria, with its population of 200mn, was once considered an attractive growth market for global brands seeking to expand internationally. But the country is experiencing its worst cost of living crisis in a generation with inflation at a three-decade high of 33.7 per cent.

Kimberly-Clark Corporation, which makes the popular Huggies nappy brand, said last month it was ending its Nigeria operations only two years after restarting a $100mn manufacturing plant in Lagos. It followed Unilever which stopped producing homecare and skin-cleansing products in Nigeria last year.

GSK’s Nigeria affiliate also ended its direct medicines distribution and switched to third-party Nigerian distributors last year. Germany’s Bayer and French vaccines giant, Sanofi, are also among the groups to have exited while US group Procter & Gamble quit in-country manufacturing in favour of importing to Nigeria.



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