8% Better: Guinness, After Diageo Exit

Policy Priority: No Insurance against Fuel Price Hikes

Diageo has announced the sale of its controlling shares in Guinness Nigeria and a new long-term partnership with Tolaram, one of the leading companies in consumer goods in Nigeria, to accelerate the growth of Guinness Nigeria.

Diageo, a “British multinational alcoholic beverage company” prides itself as a brand builder for popular liquor brands.

According to John Musunga, Managing Director/ CEO, Guinness Nigeria, the move will enable the company to better focus on its core strengths in manufacturing, marketing, and distributing of non-alcoholic drinks, beer, Ready-to-Drink (RTDs), and locally produced spirits, enhancing sustainability, growth, and value for all stakeholders.

Also, it will mitigate the negative impact of lingering foreign exchange scarcity and exchange rate volatility.

Amidst news of Diageo’s exit, Guinness’s share price increased by 8.4% or N4.25 on the day of the press release. 

Guinness share price opened at N50.55 and closed at N54.80 on June 11, the highest so far in the month.

In the last one year, Guinness Nigeria lost 22.5% off its price valuation and currently ranks as the 132nd on the Nigeria Stock Exchange (NGX) in terms of Year-to-Date performance.

It is currently the 30th most valuable stock on the NGX, with a market capitalization of N120 billion, accounting for about 0.213% of the Nigerian Stock Exchange equity market.

It also ranks as the 37th most traded stock on the NGX over the past three months (March 7 – June 11, 2024). It has traded a total volume of 92.5 million shares in 4,224 deals valued at N4.55 billion over the three-month period, with an average of 1.47 million traded shares per session.

Strikingly, its highest volume of stocks worth 19.6 million was traded on June 6 and its lowest volume of 43,330 was traded on May 9.

Within one year, 11 major foreign companies have stopped full operations in the country because of instability in external prices (exchange rate) and other prevailing macro-economic conditions.

Most of the companies that have left Nigeria are in the Fast Moving Consumer Goods (FMCG) sector.

Diageo maintains its presence in Nigeria by partnering with Tolaram under the new terms of a licence and royalty agreement. This partnership might be an opportunity for the next phase of growth for Guinness Nigeria.

“Today’s announcement represents a significant opportunity for the next phase of growth for Guinness Nigeria.

“This partnership brings together Tolaram’s deep expertise in manufacturing and distribution and Diageo’s exceptional capabilities in brand building and innovation,” said Omobola Johnson, Chair of Guinness Nigeria.

Tolaram will acquire 58.02% of Guinness Nigeria shares which was owned by Diageo to become the major shareholder of Guinness Nigeria.

Although Diageo will no longer be a shareholder, it retains the ownership of the Guinness brand and will licence it to Guinness Nigeria for the long term.

“Guinness Nigeria will also continue to have rights to manufacture and distribute the other Diageo brands that it currently manufactures and distributes including its Main Stream Spirits (MSS),” according to the press report by Diageo.

President Diageo Africa and Chief Commercial Officer, Dayalan Nayager, said, “We’re also very excited about the future of our international premium spirits business in Nigeria, a vibrant country to which we remain deeply committed.”

Diageo’s replacement, Tolaram, is a multinational company with 50 years of significant and extensive experience in Nigeria.

Tolaram has a diversified portfolio comprising Consumer Goods, Infrastructure and FinTech companies in Nigeria.

50% Cheaper: CNG Conversion Kits

The Federal Government has announced a plan to subsidise the cost of Compressed Natural Gas (CNG) vehicle conversion kits by 50% for Road Transport Union members nationwide.

The goal of the Conversion Incentive program is to create a cleaner and cheaper energy option for Nigerian motorists.

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