‘Africa needs responsible business and local content to grow’
MR. PETER NDEGWA is the Managing Director and Chief Executive Officer of Guinness Nigeria. The consummate manager and administrator is known for turning businesses around and has held his own since his assumption as the brewer’s helmsman amid the country’s economic challenges. In this
interview with CHIJIOKE NELSON, he supports local sourcing of materials and stresses responsible behaviour by his company and commitments to stakeholders as secret of survival.
There is a consensus that Nigeria’s economy has improved. What areas do you see the improvements?
There is no doubt that a number of areas have improved. First will be the availability of liquidity on the foreign currency side, especially for manufacturers who import raw materials and also spare parts for plants. We have seen some level of stability both in terms of the expected range of price versus the volatility we have seen in the currency before. That is good because it improves predictability, ability to plan and even when costs are higher, it helps to know what the price is and that is key.
The second is the availability of gas. About 12 months ago, we had fluctuations on the availability of natural gas that we use to power our plants. When we had shortages we had to go into the use of diesel, which is more expensive, less environmentally-friendly and more erratic. Previously, we had incredible delays in getting work permits or travel permits. However, in these areas, we have seen some level of improvements. Areas I feel we could improve further are the congestion at the seaports. Our exports have doubled in the last 18 months and one of the reasons why we are doubling exports is to get foreign currency, which is very helpful for us. But we have seen some level of delays as a result of the congestions at the ports, both in terms of outbound and inbound of raw materials. As a result, two things happen to the business eventually, we incur demurrage and more transport costs and also when we don’t get the materials on time, it is challenging to ensure the continuity of production. However, it is good to see that government wants to spend more money on infrastructure.
As a 67-year-old company in Nigeria, what initiatives are ongoing to drive sustainability?
Despite the challenges we have been seeing in the environment, we continue to grow our business. We have invested in our production capacity to produce spirits locally and today we are producing Smirnoff, Gordons, and McDowells locally instead of importing. We are not only saving the country some foreign currencies, this is also allowing us to put these brands at the right prices so that consumers can afford them. Our investment in spirit shows that we are committed to the future.
The second is we have also increased our local sourcing. We used to source about 40 per cent locally, now we are sourcing about 75 per cent of local materials like sorghum, glass, packaging materials like labels and crown corks. This reduces our cost of doing business.
Innovation continues to be a core part of our business and we have come to be known as the business that innovates. One aspect of that is our spirits innovation however, we have also expanded our participation in some of the other categories including beer and soft drinks. We are the only total beverage business which has spirits, beer and soft drinks, giving us a bit more opportunity to service consumers, compared to if we were specialists in a particular area.
It is about expanding our portfolio through innovation and also through building existing brands. It is about lowering our costs both through local sourcing and locally produced brands instead of importing. We also continue to drive our productivity agenda, which is all about reducing waste and being more effective. Finally, it is being close to the consumer in terms of the way we go to market, our products being better distributed.
As Africans, how can we look for ways to source alternatives for the things we depend on from countries outside the continent?
On this topic, I like two things the government is saying, one is diversify from oil. The overdependence on oil is basically part of what you are speaking about, and then add more value locally rather than being an import country. So it is not just dependence on oil, but add more value. Let’s localize production, source locally, let us export. In particular ECOWAS is a big market for Nigeria. The regional blocks are within Africa, we can source more trade regionally within Africa. Part of the reason why our exports are increasing is because we have increased exports to Ghana and Cameroun to some of our sister companies. Certainly, I think we should diversify our economy and also add more value.
Do you not think that your initiatives will have a direct impact on your sales?
Our objective is to be the best performing business, but also to be the most trusted and respected. We would not have been in this country for 67 years if we had taken a short cut in the way we drive our sales. The reason why we want responsibility in the way that consumers engage with alcohol is because we know that this is more sustainable, so people can have a balanced lifestyle that incorporates alcohol in their ways of celebrating or enjoying themselves. Abusing alcohol is harmful and we do not want harm in our society. Part of our responsibility is to ensure that there is increased awareness of the dangers of alcohol misuse and how to reduce related harm. And where we have carried out a number of these initiatives we have recorded a reduction in the incidence of abuse. This means that a lot of the work we have done around the “don’t drink and drive” initiative has had impact. So the level of awareness is much higher. It is like safety, when people are more aware of the need to stay safe, they wear seat belts. They know that when you are in the car and if you do not wear the seat belt, you are likely to be injured if an accident occurs.
We believe that we will create a better society if we have a better understanding about alcohol use and its role in a balanced lifestyle. That is why it is not in conflict with our commercial interest. In fact, it supports our ability to be in business because we will be a more respected organisation if we are seen to be responsible.
Diageo has refreshed and launched new campaigns called ‘Drink Positive’ and DRINKiQ. What are they all about?
The advantage of looking at alcohol in a positive way is to recognise that alcohol, if used in moderation, is a part of a balanced lifestyle. Therefore, Drink Positive is asking employees to engage consumers in their jobs and personal lives about the positive role that alcohol can play in our lives. For example, I am talking to you as a journalist, this is part of my role to create awareness about responsible drinking to the public through the media. As we go to the motor park for our rallies, that is another way of creating awareness on responsible drinking through various forums. We are saying that consumers should not abuse alcohol, they should drink positively. On one of our internal websites where employees collaborate and communicate, an employee said that every time he sees a behavior that is not positive he will use the knowledge he has to tell the individual to stop misusing alcohol and convince the person to drink positively.
Drink IQ is just about increasing the knowledge we have about alcohol The Drink IQ website, www.DRINKiQ.com was first introduced in 2008 when Diageo led the industry in launching a responsible drinking website. Information on questions such as, what should I know about alcohol? How is alcohol harmful to my body? How much alcohol should I drink? Are made available on this website. The website has now been refreshed, it is now much more engaging and more user-friendly and consumers can actually teach themselves. Like they say, ‘charity begins at home’, so our members of staff also have access to it. Very soon, it will be extended to professional bodies and at the end of the day it is about increasing awareness on alcohol.
Some reports have suggested that issues around underage drinking may be more prevalent in developing countries. Do you have any programmes targeted at this group?
As part of the global CEOs commitment, one of the areas we focus on is underage drinking. We need to make sure that young people understand the dangers of alcohol misuse from when they are younger rather than when they have already started to engage in drinking. We have a programme called “Smashed” which has been running in Diageo for about nine years. We are going to launch the programme in Nigeria in 2018. We will work with an agency to run this in schools, using drama to educate young people about the dangers of excessive drinking so that they understand what alcohol abuse means from the time they are young and understand the harmful impact this may have. We believe by doing this and doing it in an interesting way, in an environment where they are comfortable, they will respond to the message on the dangers of alcohol misuse.
The second thing we are doing is to look for advocates within youth communities. We recently signed a partnership with the NYSC and we use that platform to recruit responsible drinking ambassadors amongst the corps members who are then tasked with spreading the message of responsible drinking in their communities and places of primary assignment. These ambassadors will be chosen and trained to influence their colleagues not to engage in alcohol in harmful ways.
As a multinational with suppliers, vendors, wholesalers and retailers, how do you share this message to them?
Soon, we will be launching an initiative called Join the Pact. This is a global initiative that Diageo introduced over nine years ago. It is a global initiative for people to make a pledge not to drink and drive. Working with our trade partners and at every touch point where our brands are consumed and enjoyed, this will cut right across all our external stakeholder groups.
We aim to collect 100,000 pledges from Nigerians not to drink and drive. When you drink, don’t drive. When you go out in a group to have fun, designate one of you to drive and that person should not drink. If you are going out alone, arrange for taxi to take you home after you have had something to drink.
How have the initiatives of Guinness Nigeria rubbed off on the Beer Sectoral Group (BSG), of MAN, to which you belong?
As I said at the beginning, we are part of the Beer Sector Group, which comprises alcohol beverage manufacturers who have come together to drive responsibility about alcohol in society, and drive awareness around responsible drinking. We have a programme that we normally run during the ember months, which is Drive Alcohol Free. It is a way of encouraging drivers, whether commercial or private, not to drink and drive. Individual companies do various things on their own but we also come together to create awareness and communicate the dangers of drink driving.
We support FRSC in their initiatives, and we will continue to do so. We also do research on areas we should be focusing on as far as alcohol in the society is concerned. One of the issues we research on is underage drinking. We are interested in knowing which parts of the country are more prone to issues around drink driving; which parts of the country would be prone to underage drinking; which types of drinks should we be watching out for in terms of underage drinking; We do these researches because there are lots of perceptions about what alcohol does and doesn’t do. There are lots of misconceptions about alcohol and we try to educate consumers around that. Some people may believe that alcohol gives you more power to drive. So we make sure we remove that kind of misconception in our communication.
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