Whisky in Africa

20 August, 2014

And, while South Africa’s GDP is $421bn (2012) and expected to rise to $1,560bn in 2050, Nigeria’s GDP will grow from $538bn (2012) to $5,960bn during the period (figures from Diageo/ Renaissance Capital). 

Fuelling this growth is the word’s most popular fuel, oil, which Nigeria has by the barrel-load (trillions actually). “With a population of 170 million and oil reserves estimated at around 37 trillion barrels, its prospects are obviously enticing for whisky producers,” says Snyman.

At Diageo’s Africa Conference other macro-indicators were noted. The country is said to have a “low and reducing inflation rate” and a “new generation of affluent consumers”. Once labelled the Black Diamonds, the black consumer group has broadened. “Africa is more than the Black Diamonds – there is an emergence of a real middle class,” says Chivas’ Lacassagne. “It is a reality in South Africa and is now in Nigeria. This is the long-term development. What is important is that we see these trends emerging in other markets.” 

According to Diageo, value still represents 38% of the spirits market in Nigeria, mainstream is 17%, premium 38% and super premium is 7%.  Diageo has eight sales offices and, with this kind of reach, it sold 43% of all premium spirits in 2012, behind LVMH (15%) – for which Hennessey is the flagship brand – and Distell (7%). The group aims to “strengthen and accelerate sales of core premium brands” and “innovate at scale to meet new consumer needs”.  

Nigeria is the major market in West Africa but the region’s collective population is about 300m people strung together by the Economic Community Of West African States, which links Cape Verdi through to Nigeria. “Of all the various trading blocs, ECOWAS is the one that works best,” says Tim Crilly, MD of TC & Co, a German based spirits exporter which specialises in West Africa. “It is to Africa what the EU is to Europe – people don’t need a passport to cross borders and a common customs agreement.” 

For Crilly, the key to West Africa is bottle sizes. “Many distributors don’t know their own market. The man on the street doesn’t have a hope in hell of affording a 75cl bottle. My importer takes all the sizes I can give him – 20cl, 35cl, 50cl and 70cl. “In Nigeria the Christians are the biggest drinkers but Muslim consumption is sizable. They don’t drink in the open but instead with sachets – the sort used for shampoo – that they keep in their pockets.

“The potential of these markets is double or triple what people think it is – Diageo knows it,” says Crilly and adds that, for smaller countries, mixed containers are the key. Liberia, a country of 4m people, is not big enough to have a whole container of one SKU. It’s better to send mixed containers from headquarters in Nigeria.”

Over at Label 5, the key to its markets of Cameroon, Togo, Ivory Coast and Gabon is in its marketing plan. “The cost of media [advertising] is very low in our markets. We have billboards in Gabon and Togo, digital activity in Ghana and we are making a TV ad, which will be shown in Angola and probably in Gabon. We are working on radio spots too.” 

Kenya & East Africa

Kenya is one of a number of East African markets that have the right conditions for growth. Diageo is well positioned in the region through its brewing operations in Kenya, which borders Uganda and Tanzania and is close to Rwanda and Burundi. 

Combined, this region has a young population of 150m, which Diageo says will rise to 237m by 2030, along with GDP growth because of recent energy discoveries. The group also outlines the importance of the East African Community trading bloc “to enhance regional and economic integration”.  At its Africa Conference, Diageo said it expects premium and reserve spirits to grow by more than 20% between 2013 and 2017. 

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