• As connoisseurs hail return to the market
News of the prospective return of moribund Umuahia based Golden Guinea Breweries Limited would ordinarily have been received with fanfare – there is the potential job opportunities, both direct and indirect – but instead, it is mired in some controversy. Reason: the Abia State Government wants to take glory for the sweat of a private investor, Pan Marine Investment Limited, whose promoter, Chief Okey Nzenwa, laboured to raise funds to acquire the brewery and resuscitate it years after it was run aground by the state government, before a fire incident finally put it out of production. This was 2003.
Pan Marine Investments Limited having won the bid to acquire the brewery was said to have obtained a $10 million loan from Nigeria Export-Import Bank (NEXIM Bank) to revamp the brewery. It has been months of intense hard work.
But just when it became apparent that the hard work had paid off, and that in a couple of months, new Golden Guinea brands will hit the market, the Abia State Commissioner for Information, John Okiyi Kalu, took a couple of other government officials to the premises, took a picture and announced to the Abia populace that Golden Guinea was back and its products would hit the market in days.
This, he attributed largely to the effort of the state governor, Dr. Okezie Ikpeazu, while taking the opportunity to attack, subtly, his opponents who had raised issues with the government over the abandonment of the brewery during the last electioneering campaigns.
“I am happy to inform the good people of Abia State, Ndigbo and Nigerians in general that from the next two weeks they can go to any beer parlour in the country and drink their favourite Golden Guinea beer, Malt, Eagle Stout or Bergedoff Beer,” Kalu had said, while announcing that he had just drank from a bottle of Golden Guinea.
“Golden Guinea is fully back. While we applaud the doggedness and hard work of the private sector owners of the company who worked day and night to bring back our favorite brewery and sustain Dr. Okpara’s dream of a fully industrialized South East, the significance of the return of Golden Guinea is also not lost on us.
“The Ikpeazu-led administration is determined to support private sector organizations to create as many jobs as possible in the state to take care of the current and future employment needs of our brilliant graduates. Aba automated Shoe Factory and Nibra Leather City will open later this year to further the job creation agenda.”
The announcement triggered a debate on social media, with many supporters of the Ikpeazu government celebrating it as a huge feat. But it was a false narrative. Abia government had nothing to do with the revival of the company. It had been the sole effort of the investors. And they set the record straight.
In a statement on Tuesday, the company clarified that it had fixed before end of Q2, 2019, to commence production, while encouraging the public to disregard the “mischief makers”.
“The attention of Golden Guinea Breweries Plc has been drawn to several unauthorized recent online publications on commencement of full operations of the company,” the statement by the company’s secretary and legal adviser, Udo Odogaranya, said.
“The company stands on the disclosure and publication issued to the public via the Issuer’s portal on resuming operations before the end of the second quarter of 2019. We have not resumed operations and therefore, any contrary and mischievous online publication is hereby disclaimed.”
When subsequently on Wednesday, BusinessHallmark reached out to the state government for clarification through Mr. Sam Hart, Senior Special Assistant to the governor on public communications, he made the issues a bit clearer.
“We commend the core investors in the Golden Guinea Breweries, Pan Marine Investment Limited, who have spent a lot of resources and energy to ensure that it gets back on track,” he said.
“The Abia State government basically gave them moral support. But they did all the investment and everything required. We have full confidence in the ability of the core investors to restore the company to its old glory. They have given us the full assurance. We have gone and we have seen that they are doing it. They have shown that they have the capacity and the capability to excel and we are giving them full support.”
Entering a tight beer market
With the controversy seemingly over, Golden Guinea Breweries – makers of Golden Guinea Lager, Eagle Stout, and Golden Guinea Malta – will probably have to start worrying about how it can carve a niche for itself in a highly competitive market dominated by three global giants: Nigerian Breweries Plc (NB), Anheuser-Busch InBev (AbInBev) and Diageo through its subsidiary, Guinness Nigeria. These are global brewing heavyweights with more than enough strength to force it back to where it had been since 2003.
The brewery market is also facing some challenges such as declining market due to poor economy as a result of low purchasing power of consumers; as well as the rise of Pentecostal Christianity which abhors alcoholic beverages. There is also the prevailing insurgency in the north east which has excluded the area from the beer market.
However, the Aba Road, Umuahia based company, will have factors that will play to its advantage and ensure it not only survives, but even thrive.
“I think because of the emotional attachment that the Igbo people, particularly Abia people, have for Golden Guinea, it will still find a market, notwithstanding the dominance of NB brands like Star, Heineken and so on,” said Mr. Kazie Uko, PR consultant and CEO, Skkot Plus Nigeria Limited.
Golden Guinea will present a slightly different challenge in what is already an intense beer war. It is indigenous and has deep historical connection with particularly, the Eastern Nigeria market where it once held sway from 1963 when it began production under the then Eastern Regional government of Dr. Michael Okpara, through the 70s and 80s to the 90s.
It died in 2003 following a fire incident that gutted its facilities. But even before the unfortunate fire incident, it had, on account of poor management, caved in to the dominance of NB whose signature products, Star and Gulder had taken over the market.
A lot has since changed in the ever dynamic beer market. NB, no doubt, remains the giant with over 50 percent market share. But it is a staggering giant, which if not careful, could collapse on the weight of new and powerful AbInBev – although the company has seen its fortune dwindle of late – and with Guinness handy to pick up the pieces. Golden Guinea’s entrance could yet change the entire landscape despite it being a dwarf in the midst of giants.
The Beer Market at a Glance
The decade between 2000 and 2010 was a period of unassailable dominance of NB, particularly in the Eastern Market. Its Star, Gulder and Heineken were choice beers for almost everyone. Harp introduced by Guinness challenged Star, but couldn’t sustain the challenge. Guinness Stout still maintained strong presence, however.
The growing popularity of the English Premier League at this period also played to NB’s advantage. Star, in addition to being tagged Shine Shine Bobo, became known as Chelsea in many areas, and fans of Chelsea Football Club fell in love with it. Gulder, on the other hand, was christened Manchester United. It was the favourite of the club’s fans. It was easy to tell, during weekend football matches, who was a Chelsea fan and who was a Manchester United fan by the choice brand of each fan.
Heineken, although not particularly identified with a club, had become something of prestige. The bigger boys opted for it to distinguish themselves from the crowd. While Life and 33 Export – before they were acquired by NB – were also in the market, a combination of price and taste put them in a position where it had no chance. They were sold cheaper and everyone regarded them as brands for those whose class was beneath. 33 Export was particularly denigrated as the masons’ brand, which caused headache.
However, the entire beer landscape in Eastern Nigeria changed in 2012 with SABMiller entering the market with its signature brand, Hero. Hero was strategically positioned as the brand for Easterners. Its logo bore the image of a rising sun, a feature of the Biafra’s flag. And it was released on the day of Chief Emeka Ojukwu, the late Biafra leader’s funeral.
Hero became an instant hit; it became the choice beer for everyone. It broke the class barrier. Although it was sold at N150, N50 less than the price of Star and Gulder, almost everyone preferred it. Star and Gulder, which had until then, dominated the market, lost appeal. They have not recovered since.
At the same period, SABMiller took over Trophy, a popular brand in the Western part of the country originally launched in 1978 by International Breweries. NB suddenly found itself struggling to maintain its dominance in the beer market. It acted quickly. In 2012, it acquired, re-branded and relaunched Life for the Eastern market – while also buying over and re-branding 33 Export – as a response to Hero. For the Western market, it bought over Goldberg to counter SABMiller’s Trophy.
In the East, NB promoted Life – sold then at N150, same as Hero. Both brands now go for N200, while Star and Gulder go for N250 – as an embodiment of Igbo progress. Its motto became ‘Progress’ with popular musicians, Flavour and Phyno as brand ambassadors. Billboards of Life with Flavour in traditional Igbo regalia were strategically positioned in different areas, especially the Niger Bridge, with bold inscriptions: I am For Progress.
It was magical. Gradually, the new look Life became accepted. It knocked Hero off the perch to become the dominant brand in the East, followed, of course, by Hero, while Star and Gulder have continued to struggle, particularly the former.
Heineken on the other hand, also gradually re-established itself as the leading premium brand. NB was back in business. Today, Life remains the most widely sold beer brand in the East, perhaps even in the entire country.
“I have had one carton of star for over one month now, nobody is buying,” Ezeaku Kelechi, a bar owner in the university town of Nsukka said on Friday.
“I will say that people buy more of Life, followed by Hero, then Heineken and Guinness Stout. Budweiser is not popular here yet.”
But while NB achieved huge success with Life in the East, its success with Goldberg in the West has been somewhat lackluster. The initial acceptance has faded. Today, Trophy is easily the number one brand across the states of the South West.
Growing Competition Today
In 2016, the industry witnessed a momentous event. AbInBev completed £79billion merger with SABMiller, becoming the world’s biggest brewer. While SABMiller may not have had the strength to challenge credibly NB’s dominance of the Nigerian market, with AbInBev, it is a different kettle of fish.
NB with far greater outlets, highest number of breweries, at about eleven, and an array of products: Heineken, Star, Gulder, Legend Stout, Goldberg, 33 Export, Williams Dark Ale, Turbo King Stout, More Lager, Star Radler, Star TripleX, Star Lite, Tiger and Stella, still dominates the market with over 50 percent share.
They are seconded by Guinness Nigeria with its own beer varieties: Guinness Stout, Harp, Satzenbrau, Dubic, and Royal Kingdom. And an array of spirit, alcoholic and non alcoholic beverage brands: Origin, Smirnoff, McDowell’s, Baileys, Johnnie Walker and Gordon’s Dry Gin. But the world’s biggest brewer, AbInBev with three breweries in Anambra, Rivers and Osun, is making increasing inroad with its Budweiser, Trophy, Hero and Castle Lite.
With Budweiser, AbInBev is challenging NB’s Heineken and Guinness Nigeria’s Guinness Extra Stout, all of which are sold at N300, in the premium category, while still looking to introduce Stella Artois, Becks and Corona.
However, it is in the value segment that the real battle is. AbInBev has largely edged out NB in the South West with its Trophy brand. Of 30 beer drinkers sampled in Ogun, Lagos and Osun, 21 said they take Trophy; 6 Star and Gulder, and three, Goldberg.
“Goldberg?” one respondent, Alausa at Ifo, Ogun state, had wondered. “Who dey drink Goldberg for here? Nobody dey drink Goldberg, that thing wey dey cause headache; na Trophy everyone dey drink!”
In Q1 2018, AbInBev’s International Breweries, makers of Trophy – the only arm of the company listed in the stock market – made revenue of N25.97billion, and profit before tax (PBT) of N2.56billion. In the same quarter, Guinness Nigeria made revenue of N70.6billion and profit before tax of N3.54billion. NB on the other hand, made revenue of N82.9 billion and PBT of N15.2billion.
Trophy’s Honourable tag, with actor Femi Adebayo as its face, has obviously knocked out Goldberg’s Your Excellency campaign and its face, actor Odunlade Ademola, even with the latter’s larger distribution network.
The ground NB’s Goldberg lost to Trophy in the South West, however, it more than gained with Life in the East and parts of North Central where it is now doing better than Hero. But it is this advantage that the return of Golden Guinea could potentially cut into. And it is hardly in doubt, NB is paying attention.
“Obviously, we are jittery. You know Golden Guinea is an indigenous brand. If they promote it well, it will easily gain acceptance and that will be bad news for us. Please, you should try as much as possible not to create excitement around it so that people don’t begin to have the urge for it,” an NB staff who craved anonymity because he did not have the authority to speak for company said.
But it’s rather striking that despite the significant improvement Trophy’s standing in the South West, it has not reflected much in the balance sheet of International Breweries.
The industry is generally struggling. This reflected clearly on Q3, 2018 results. And surprisingly, International Breweries lead the loss. It incurred a loss before tax of N3.9billion and loss after tax of N4.2billion. NB, on the other hand, made N254 billion, which represented a decline from the N270 billion it made in Q3, 2017. It’s PBT of N22 billion and PAT of N14 billion was also a significant decline from 2017 figures. Guinness however, revelled in the storm, posting revenue of N105.4 billion. PBT of N7.89 billion and PAT of N5.09 billion.
Golden Guinea being an indigenous brand could significantly cut into NB’s market share in the value category, probably even have the Hero effect. This would be bad news for the country’s leading brewer.
What will be key in Golden Guinea establishing a strong presence in the East, and indeed across the country as it plans, analysts say, is the right promotion.
“They would have to appeal to the people’s sentiment; to say, of course, that this is truly our own. There is an emotional attachment to the Golden Guinea brand by Abia people. It is a major regional heritage which you can compare to the Odua Group of Companies in the South West. It would be the only remaining legacy of the Eastern Region with ACB gone and one can’t say what is happening with Niger Cement,” Uko noted. “They have to draw from the fact that it has come back to create jobs and boost the economy of Abia State.”
In the meantime, the news of the company’s return is being received with mixed reactions in Eastern states. Some say its welcome development. Others say they couldn’t care less.
“It would be interesting to have GG again,” Jekwu Ugwuode, an Aba based trader told our correspondent. “I remember it from my childhood days. It was the real deal then.”
The company had, however, said it would not be restricted to the Eastern market and would ensure distribution across Nigeria.
“Our distribution is not going to focus only on the Eastern States; we will be distributing our drinks across Nigeria. We must ensure our drinks are in Lagos and other states in the West, North and Southern Nigeria, while also consolidating our premier position in the East,” a representative of the company had said.
The company had also disclosed that its share trade at the Nigerian Stock Exchange would resume once production and distribution starts. What is certain in the final analysis is that it must devise creative marketing strategies to break into a market now dominated by global brands. The lesson of other indigenous companies which could not compete and had to be acquired by the foreign players will come in handy.
“Drinking Golden Guinea depends on the quality they come out with,” said Steven Alex, “I prefer stout to green bottles. My preferred brand is legend.”