E-Malt.com News article: 2000

Africa: Sales of Guinness are growing in Africa, overtaking Britain and Ireland as the biggest market for the dark Irish brew in the past two years, Bloomberg News reported on December 31. Diageo, the world's largest liquor maker and owner of Guinness, is poised to earn net income of £135 million, or $233 million, from beer sales in Africa compared with £85 million in Ireland and £45 million in Britain, according to forecasts for the year through June by Graeme Eadie, a Deutsche Bank analyst. Profit from sales in Ireland totaled £130 million in 2001 compared with £70 million from sales in Africa, Eadie said.

"Without growth in African volumes, total brand volume would decline," said Nigel Davies, a J.P. Morgan Chase analyst in a report on Guinness in September. Guinness's reliance on developing nations in Africa for its profits, which account for about 17 % of overall Diageo profit, is a cause for investor concern, according to Deutsche Bank and J.P. Morgan.

"We aren't dismissive of the growth in Africa," Davies said. But "an over-reliance on this region for growth in Guinness volumes wouldn't be encouraging for the long-term brand." Africans have been drinking Guinness since the slave-trading era of the 1820's, company documents say. European merchant sailors preferred to load up with Guinness imported from Ireland rather than other beers because a higher concentration of alcohol, at 7.5 %, gave the stout a longer shelf life.

Guinness now employs 5,000 people in Africa in breweries from Lagos to Nairobi and from the Seychelles to Ouagadougou. The company accounts for about a quarter of branded-beer sales Africa, said J.P. Morgan's Davies. African countries - Nigeria, Kenya, Cameroon, Ivory Coast and South Africa - account for 5 of the 10 largest markets by volume in the world for Guinness and 40 % of worldwide profit.

Africans consume the equivalent of 2.5 million 30-centiliter, or 10.1-ounce, bottles of Guinness a day. Nigeria, Africa's largest nation with 127 million people and its biggest oil exporter, accounts for about half of these sales.


The company plans to spend $400 million over the next five years to increase production in Nigeria at its three breweries, which use local grains such as maize and sorghum instead of barley. Every hour, the Lagos brewery alone fills 108,000 bottles.

In Ireland, Guinness sales fell 4 percent in 2003. But in Nigeria, sales are "growing in the mid-single-digit figures," the Deutsche Bank report said, without specifying a time frame.

Heineken, the world's third-largest brewer, is increasing investment in Africa to compensate for declining sales in the United States, France and the Netherlands. Nigerian Breweries, controlled by Amsterdam-based Heineken, opened a E220 million, or $267 million, brewery in October in Enugu state in southeastern Nigeria.

Companies controlled by Heineken and Guinness between them account for four-fifths of branded-beer sales in Nigeria. Nigerian Breweries and Guinness Nigeria have the highest capitalization on the Nigerian Stock Exchange.

Across Africa, Guinness and Heineken compete with SABMiller, the former South African Breweries, and Les Brasseries and Glaceries Internationales, or BGI. The leading brewers cooperate to maintain their hold on national markets. Guinness Ghana and Heineken-controlled Ghana Breweries agreed last week agreed to merge, with Diageo owning 51 percent and Heineken holding 20 percent of the new company, said David Hampshire, Diageo's managing director for Africa.


04 January, 2004