Guinness Nigeria, one of the biggest players in the country’s brewing industry, is to have a new Chief Executive Officer by January. Seni Adetu is giving way for John O’Keeffe at a time the company’s sales figures have continued to dwindle, ADEDEJI ADEMIGBUJI reports
By next January, Seni Adetu will vacate the hot seat. Diageo’s Guinness Nigeria division yesterday announced that Adetu will be replaced by John O’Keeffe, who has been with Diageo for around 20 years. He is global head of Innovation and global head of Beer & Baileys.
O’Keeffe started his career as a graduate trainee for Guinness Ireland, holding many marketing roles in Ireland before moving to Jamaica as Marketing Director. He later moved to the Nordics where he held his first Managing Director role, and then moved to Athens where he spent two years as the Europe Marketing Director for Johnnie Walker. After this, he became the Managing Director, Russia and Eastern Europe based in Russia before returning to Ireland, to take-up his current role as Global Head of Diageo Innovation and Global Head of Beer & Baileys.
He has been a Board member of Guinness Nigeria Plc for the past two years. He has a Bachelor of Commerce (Hons) in Economics & Marketing from Cork University.
Adetu was made Managing Director and CEO of Guinness Nigeria in May 2012. He will step down at the board meeting next month.
Diageo said: ”Having completed his assignment, Seni will report to Nick Blazquez, president, Diageo Africa & Asia, starting January 2015.”
Guinness Nigeria, in a statement last night, said Adetu performed creditably well.
The statement reads: “During his time in role, Seni has creditably led the business, successfully completed the capacity expansion project and commenced a major transfromation in the company’s Route-to-Consumer.
“Under Seni’s leadership, the quality and diversity of our portfolio have been enriched with the renovation of Guinness FES and Harp, the repositioning of Dubic and Satzenbrau, the expansion into mainstream spirits and soft drinks categories, the introduction of new brands like Snapp and Orijin. In the period, we have won the Advertisers Association of Nigeria (ADVAN) award for best beverage innovation in Nigeria in 2014 with Orijin and sustained Guinness Nigeria’s long-standing position as one of the most reputable companies in Nigeria.”
Significantly, the change of guard is coming at a time the company is not doing well financially. In Diageo’s latest full-year results, announced in July, Nigeria was flagged as having performed particularly badly, with overall volumes sliding by 9 per cent and reported net sales falling by 14 per cent.
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.
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.
Of recent, Guinness and its main rival, Nigerian Breweries Plc, have been having issues over alleged de-marketing. 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 were 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.
An industry observer said: “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?”
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.
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.”
Nigerian Breweries spokesperson Edem Vindal refused to comment when this reporter sought his opinion on the matter.
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.”
A doctoral student at the University of Lagos and 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.
Before Adetu took over, Nigeria was expected to overtake the UK as the largest market for Guinness stout. This was expected to happen this year. Instead the market declined seriously.
Renaissance Capital, in a research report on Nigeria’s brewery industry, said sales of Guinness were in 2011 driven by Sub-Saharan Africa countries, with 41 per cent of global volumes consumed in the region in 2010.
“Stout volumes have been growing quickly in Africa over the past few years, while they have been declining in traditional beer markets,” said the report.
At the time, Nigeria was the largest market in Africa for Guinness and the second largest globally, since it overtook Ireland in 2007.
“The largest market remains the UK, but we expect Nigeria will overtake the UK and become the largest stout market globally in 2014,” noted Renaissance.
The report said Nigeria was the most attractive market in Sub-Saharan Africa for brewers because it had West Africa’s highest consumption of pure alcohol.
Will O’Keeffe make the difference? Time will tell.
