Diageo to form spirits division in West Africa

Smirnoff owner Diageo will establish a new subsidiary to import and distribute its spirits in West and Central Africa after ending a deal with Guinness Nigeria.

London-headquartered Diageo appointed Guinness Nigeria as its exclusive spirits distributor for the Nigerian market on 1 January 2016.

The Nigerian-based company, which is a subsidiary of Diageo, will no longer import or distribute Diageo’s global brands – including Scotch whiskies Johnnie Walker and Singleton, and Baileys liqueur – from April 2024.

The distribution agreement also included Smirnoff vodka, Cîroc Vodka, Gordon’s gin, Captain Morgan rum, Tanqueray gin and Indian whisky McDowell’s No.1.

Diageo said the move is in line with its decision to create a new spirits-focused division, with Nigeria as one of its hubs.

In the year ending 30 June 2023, Guinness Nigeria’s revenue from Diageo’s international premium spirits reached NGN 14 billion (US$18.4 million), representing approximately 6% of the Nigerian arm’s total sales.

The division’s ‘mainstream spirits’ portfolio, which includes Orijin Bitters and Smirnoff X1 Choco, rose by 36%.

Guinness Nigeria will continue to manufacture and distribute its entire portfolio of non-alcoholic drinks, beer, ready-to-drink (RTD) and locally produced spirits, including Orijin, Captain Morgan Gold, Gordon’s Moringa and Smirnoff X1 Choco.

The move will also ‘accelerate innovation’ in local spirits products, the firm said.

Furthermore, the strategic change reduces Guinness Nigeria’s foreign exchange requirements and softens the negative impacts of ‘lingering foreign exchange scarcity and exchange rate volatility on the financial performance of the company’.

John Musunga, managing director and CEO of Guinness Nigeria, said: “This change will better position Guinness Nigeria to focus on our core business, which has consistently delivered growth over the years, despite the challenging external environment.

“The focus on our core strengths will benefit from the investments we have made into expanding capacity at our breweries in Ogba Lagos state and Benin Edo state to meet the growing demand for our beer and highly successful local spirits brands.

“It will also strengthen our manufacturing, marketing and distribution capabilities and reduce our forex exposure while enhancing sustainable growth and value creation for all stakeholders of Guinness Nigeria.”

Diageo said it remains a key shareholder of Guinness Nigeria, with no changes to shareholding.