After more than seven decades of operation in Nigeria, Guinness has announced its exit from the Nigerian market. The renowned brewery will sell its controlling shares to Singaporean conglomerate Tolaram Group, citing enduring economic challenges under President Bola Tinubu’s administration as a major factor in its decision.
The decision comes after Guinness Nigeria recorded a staggering N61.9 billion loss after tax between July 2023 and March 2024. This financial turmoil followed President Tinubu’s controversial decision to float the naira in an attempt to unify the currency’s value across official and parallel foreign exchange markets. The move, however, backfired, causing significant financial setbacks for numerous multinational companies operating in Nigeria, including Guinness Nigeria. The brewery’s loss in Q3 2023, amounting to N61.7 billion, represented a dramatic 1000 percent increase from the N5.9 billion revenue generated in the same period the previous year.
Diageo, Guinness’ parent company, attributed this financial decline to the naira’s continued downward trend, which played a significant role in their decision to sell their 58.02 percent majority stake to Tolaram Group.
“Under the terms of an agreement signed today, 11 June 2024, Tolaram will acquire Diageo’s 58.02% shareholding in Guinness Nigeria royalty agreements for the continued production of the Guinness brand and its locally manufactured Diageo ready-to-drink and mainstream spirits brands,” the company stated on Tuesday.
Guinness Nigeria Plc, listed on the Nigerian Stock Exchange, has been a significant player in the Nigerian market since its incorporation on April 29, 1950. Initially established as a trading company importing Guinness Stout from Dublin, the brand has maintained a strong presence in Nigeria for nearly 75 years.
Despite the sale, Diageo assured stakeholders that the transaction, expected to conclude by 2025 pending requisite regulatory approvals, would not affect its ownership of the Guinness global brand. “Diageo will retain ownership of the Guinness brand, which will be licensed to Guinness Nigeria for the long term,” the company emphasized.
This strategic exit aligns Guinness with other multinational corporations like GlaxoSmithKline and Microsoft, which have also departed Nigeria in recent years, citing the harsh economic climate as detrimental to profitable operations.
Abidemi Ademola, Guinness’s legal director, confirmed the transaction details, stating, “The transaction is expected to be completed during fiscal 2025, subject to obtaining the requisite regulatory approvals in Nigeria.”
Popular Diageo brands in Nigeria, such as Smirnoff Ice, Smirnoff Vodka, Orijin Bitters, Malta Guinness, Gordons Orange Sunset, and Dubic Malt, have been household names and will continue to be produced under the new agreement.
The exit of Guinness marks the end of an era for one of Nigeria’s most enduring multinational companies, reflecting the broader economic challenges that continue to affect the business landscape in the country.
Credit: People’s Gazette
