Diageo reduces presence in Nigeria, sells Guinness to Tolaram

Diageo Plc, the world’s largest spirits producer, is selling its majority stake in Guinness Nigeria Plc., the latest multinational to either exit Nigeria or reduce its stakes there.

The UK-based company is selling its 58% stake in Guinness Nigeria to Singapore’s Tolaram Group, a consumer goods conglomerate with investments in Nigeria’s Lekki Deep Sea Port, for ₦81.60 per share, about N103 billion.

The move comes as Nigeria grapples with its worst cost-of-living crisis in decades, which significantly reduces consumer spending.

This follows a trend of companies like Unilever, Procter & Gamble, GSK, and Sanofi either scaling back or exiting Nigeria entirely. The challenges for international businesses are numerous:

• Dollar Scarcity: A lack of readily available US dollars makes it difficult for companies to repatriate their earnings.
• Currency Depreciation: The Nigerian Naira has depreciated by nearly 70% against the dollar since 2016, eroding profits.
• High Inflation: Decades-high inflation is squeezing consumer spending and hurting overall demand.

Despite the sale, Diageo says it will retain ownership of the Guinness brand, licensing it to Guinness Nigeria for continued production. The company will also maintain a presence in the country through their international premium spirits business.

The transaction is expected to be finalized in fiscal 2025, pending regulatory approvals in Nigeria.

Shares in Guinness rose 8.41% Tuesday on the announcement to close at ₦ 55.60, its highest price in four months.

What they said:

Omobola Johnson, Board Chair, Guinness Nigeria, said: “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. I believe this is a winning combination which leaves Guinness Nigeria extremely well placed to drive further growth in this market.”

Adebayo Alli, Managing Director/Chief Executive Officer, Guinness Nigeria, said: “Today’s announcement marks an exciting moment for Guinness Nigeria, our employees and our customers. I look forward to working alongside Tolaram, which is one of the largest and most respected consumer goods companies in Africa, and I am pleased to note Tolaram’s alignment with Guinness Nigeria’s values and its strong commitment to build an enduring and sustainable business”.

Haresh Aswani, Managing Director, Tolaram Africa, said: “We are thrilled to welcome Guinness Nigeria, a company with such a rich legacy and strong consumer loyalty, into our ecosystem. This strategic move will expand our significant footprint in the Nigerian market and presents an opportunity to leverage our combined strengths to foster innovation and deliver immense value to our customers and shareholders across the nation.”

Diageo Chief Executive Debra Crew said: “I’m excited to announce our new partnership with Tolaram. Guinness has been Nigeria’s favourite beer for nearly 75 years. Tolaram share this passion for Guinness and for Nigeria, making them the perfect partners as we continue to grow our business and seek to delight even more consumers in the country.”