Nigerian Breweries Plc and Guinness are the biggest players in the country’s brewing industry. This comes with rivalry. The latest centres on allegation of one destocking the other. Does this have anything to with decline in beer revenue, which a player blamed on a competitor’s aggressive trade practices? ADEDEJI ADEMIGBUJI
reports
It is not uncommon to see a bar in a nite club decorated with Guinness Stout. Another club may choose to brand its bar with a product of the Nigerian Breweries Plc. Bar branding is not new in beer marketing. But, it is now at the heart of a crisis between Guinness and Nigerian Breweries Plc.
This practice also includes brewers offering incentives to sales men and bar owners. The incentives come in form of branded materials, coolers or chillers. The intention is simple: to build their brands.
Significantly, the practice does not mean the bar owners cannot sell other products. In the last two weeks, however, a new meaning appears to have been given to this practice.
It started with an advertorial by a Non-Governmental Organisation, the Consumer Rights Advocacy Network of Nigeria (CRANN).It accused a major and dominant brewery of engaging in “pirate marketing”. According to the NGO, Nigerian Breweries offered distributors and bar owners incentives to destock Guinness brands and prevent consumers from making a choice.
The series of adverts published in major newspapers displayed silhouette of two bottles, with various headlines, such as “Wake up Call to Consumers,” “A Call for Fair-Play”, “Unfair land-grabbing in the Alcoholic Beverage Industry”. The adverts said Nigerian Breweries was bullying its close rivals through what it termed as pirate marketing. CRANN displays two bottles. One looks like the Nigerian Breweries’ Legend Extra stout chasing the other which looks like the Guinness stout. The body copy gave an impression that Nigerian Breweries was offering incentives to distributors to remove Guinness brands from shelve, hence, preventing consumers from making a choice.
The advertorial are estimated to have cost the NGO N20 million plus. TV presenters at Channels Sunrise programme monitored by The Nation wondered what the interest of an NGO was in a matter of competition between major brands in the beer sector.
Experts have faulted the message of the advertorial.
“If going by the branding of the bottles of one of the ad series, one can easily decipher that the small bottle branded ‘Ogba’ is referring to Guinness Nigeria Plc and the big bottle branded ‘Surulere’ is Nigerian Breweries Plc. If my guess is as good as yours, could it be that the disappointing results recently released by Guinness Nigeria Plc is attributable to what the NGO described as ‘Pirate Marketing’ and ‘De-Marketing?” an industry observer told The Nation.
Guinness is located at Ogba on the outskirts of Nigerian Breweries is located in Surulere, Lagos mainland.
The adverts have raised posers about the decline in sales in the sector. The beer industry recorded a decline in growth in the third quarter of 2013. The market witnessed a decline of about 10 per cent in 2013.
Financial Derivatives Company (FDC), a diversified financial institution, said the nation’s beer market has seen a decline in the super-premium and mainstream brands to the benefit of value / growth brands (8.3 per cent growth in 2013) characterised by relatively lower prices. Such brands include Trophy lager, Hero beer, Goldberg, Life beer and Dubic beer. “From our analysis, we conclude that the industry is attractive. We note that though the barriers to entry are high, the bargaining power of suppliers is moderate, while the bargaining power of buyers is low. There is little threat of substitutes for the products produced in the industry and favourable complements for the products,” FDC said.
In its latest company’s audited result for 2013, Guinness experienced a 19 per cent drop in its profit after tax, from N11.864bn in 2012 to N9.573bn in 2013. The company’s revenue at N109.202bn was 11 per cent lower than the N122.464bn it posted in 2012.
Its Managing Director/Chief Executive Officer, Mr. Seni Adetu, said the revenue decline was due to pricing disadvantage, growth in the value segment where the company is a relatively small player, competitor’s aggressive trade practices and increased finance costs.
The Director of Communication, Guinness Nigeria, Mr. Sesan Sobowale, told The Nation that its major rivals are destocking its brand by offering incentives to distributors so that they will have preference for their brands when consumers call.
“We see a situation whereby the sales men of this company will go to bars, not just in Lagos, Port Harcourt, Abuja, Ibadan but in all of the major towns and cities of Nigeria and offer bar owners or bar men incentives to destock us, or not to stock certain of our brands or whereby they stocked them in terms of the fact that they had bought from the wholesalers to hide them,” he said.
With a profit after tax shrinking after spending over N1.6 billion on advertisement in 2013, Guinness has embarked on one of the most aggressive advertising campaigns in recent times through its “Colourful World of More” campaigns.
In a report by Media Fact, a publication of MediaReach OMD for West African media market on top 20 brands in Nigeria, The Nation’s calculation showed that of the N6.5 billion spent by Lager (beer) category, Guinness accounted for N2.7billion as against Nigerian Breweries’ N3.8 billion. According to the report, Guinness led the NB brands in the brand categories in above-the-line media, spending N1.6billion as against NB’s Star. Despite this, Guinness’s brands have suffered many notches which made it impossible to recoup its media investment and remain the second major player in terms of market share.
“We have spent billions of naira to promote and build these brands but of what use is this when a consumer gets into the bar with his friends and say give me Malta Guinness and the bar people say there is no Malta Guinness. Of what use will that be? That is really where we were hurt most. We are spending money promoting and building this brand but as a result of a deliberate action of a competitor, these brands are not available for consumers to make a choice. And so, the value of our investment has been lost. You can only get the value of our loss if you look at our advertising and promotion spends in the last five years,” Sobowale said.
This, perhaps, is the reason why industry observers believe Guinness may have hired CRANN to tactically advocate for it against what it perceived as ‘Pirate Marketing’ activities by Nigerian Breweries.
Speaking at a press conference on Pirate Marketing in the Alcoholic Beverages Industry in Lagos, CRANN’s coordinator Sina Loremikan, decried what he described as a “de-marketing endeavour,” which “negates the principles that promote fair competition in the Nigerian corporate sector – inclusive of the alcoholic beverages industry.”
CRANN stated that it was very concerned in recent times as many Nigerians had made complaints to it of “how one of the prominent breweries in Nigeria has embarked on a vigorous campaign of de-marketing its key rival and competitor, with the brewery in question going to major retailers across Nigeria to induce them with very juicy incentives so as not to stock, display or sell the products of its said competitor.”
Hammer for CRANN
When contacted, Nigerian Breweries spokesperson Edem Vindal said: “No comment.” But, CEO, Marketing Services International, Friday Emeka, defended the brewing giant. Emeka said:”Curiously, my first worry was why an NGO should see itself as an advocate for and on behalf of competing brands in the industry? While studying CRANN’s advocacy ads in the national dailies and the lop-sidedness of the campaign and obvious misapplication of marketing terms contained therein, I asked myself ‘what is the role(s) of an NGO in a society? Don’t NGOs need to do their homework well before embarking on campaigns? Do NGOs exist to bring one down to promote the other? A robust civil society is one with the active participation of millions of citizens. This can only be achieved by people have adequate understanding of the role of NGOs in modern societies. These are essential credentials found wanting among the profiteers, hustlers, and attention-seekers and political jobbers that are driving CRANN. Is it not curious that issues being raised have nothing to do with ‘demarketing’ and ‘pirate marketing’ as concepts in modern marketing as claimed by Loremikan and his sponsors? It is quite unfortunate that Loremikan’s sponsors failed to educate him on what ‘pirate marketing’ and ‘demarketing’ as marketing concepts mean.”
The Chief Executive Officer of a marketing firm, Kentesy, Mr. Kennedy Nwagwu, noted that the brewer’s war has given rise to misuse of marketing terms.
“I think these are wrong choice of words. What is being pirated here? Is NBL packaging their products in the name of Guinness? Piracy is simply an unauthorised use of other company’s brand name(s) mainly for economic purpose. This act is not pirating marketing since NBL did not use any of Guinness branding icons illegally,” said Nwagwu.
While it is not clear whether Guinness is the sponsor of CRANN or not, Sobowale told The Nation: “I have set the fact before you. I will let you and your readers conclude that.”
Whether the fighting for the brand concerns an NGO or not, Loremikan, in an interview, said: “Essentially, within most marketing spaces, the sanctity of the consumer’s ability to choose from a range or variety of products is usually guaranteed and protected by legislation. The consumers’ space for choice should ordinarily be expansive and protected, and most organisations offering goods and services are generally aware of this, which is why we have fair competition and anti-competitiveness laws in our legal books in Nigeria,”
When The Nation sent a follow up mail to Guinness to respond to the allegation that it sponsored CRANN to launch an onslaught against NB, the company failed to respond as at press time but industry watchers believe an NGO should concentrate on consumers’ protection and not an issue that is purely competition.
Has the last been heard of this matter? It does not look so.
