Guinness has finally taken the bold step. The company is about to execute the internationlisation of Orijin, a Nigerian brand the company leveraged to lead the herbal drink category and save its books.
While the company will also be exporting Guinness Stout in South Africa, the inclusion of Orijin is a smart move that can be properly leveraged beyond the rationale of shoring-up Forex earnings for a company that has seen its balance sheet battered by external and intrinsic factors.
No doubt about it, Guinness was saved by the whiskers as a result of the huge sales growth recorded from its Orijin herbal drink between 2013 and 2015. In its move to further maximise the opportunity, Guinness has further released sub-brands under the Orijin brand with ready to drink alcoholic and the latest addition Orijin Zero. While the brand is seeing a surge in competition, Guinness still get a serious market share in the category.
As a company that used to release impressive financials, Guinness has seen its balance sheet bleeding huge figures with marginal net profits in recent times. In its Q1 2016, the company posted NGN 864 million in net revenue. Gross revenue fell to NGN39 billion versus NGN40 billion in the previous year.
Part of the internal challenge with Guinness is that the company uses the CocaCola model whereby its Guinness Stout is being over-marketed even in the face of a waning consumer appetite for the brand for various reasons. Change in demography, metamorphosis of pop-culture, competition, pricing and trade margins. A concatenation of these factors has reduced the influence of Guinness Stout.
Therefore, if Orijin would do well in South Africa and other African countries, why nor push its further instead of still forcing Guinness Stout further. Unless the team can justify that pricing and cost of production in Nigeria can really yield higher margins, this is not to say, Guinness Stout should be pushed if it is really worth it
Guinness is operating in a tougher market in Nigeria than ever. Apart from systemic and fiscal problems in Nigeria, the market is ferocious in the way and manner they are all fighting for drinkers’ share of throats.
Nigeria Breweries, Guinness, arch-enemy has a bigger business and revenue profile due to its aggressive acquisition across key regions of the country. In Q2, Nigeria Breweries revenue nearly doubled Guinness’ numbers with an impressive gross revenue of NGN79 billion in the second quarter.
Nigeria Breweries can as well decided to take its competing brands to South Africa and more markets. Therefore, Guinness must ensure it properly internationalise the Orijin brand in any markets it is going to by looking beyond exportation and doing trade and consumer marketing programmes that can give it.
SAB Miller, the market leader in South Africa would not also take it lightly with anyone coming into its turf. The merger of SAB Miller and AB InBev might further give the company the courage to come all out for the Nigerian market with its key flagship brands.
While the high inflation and struggling economy might taper bullish moves, the beer and alcoholic beverage is expected to spend more than any category. Guinness should take put its money where its mouth is, Orijin might be the magic wand needed by the company to clear its Augean stable.