‘Success is beyond the commercial aspect’
by Iheanyi Nwachukwu
February 22, 2018 | 1:55 am| | | Start Conversation
Peter Ndegwa, Managing Director/Chief Executive Officer, Guinness Nigeria Plc notes in this interview that the multinational looks beyond its commercial interest, investment, paying dividends and returns to shareholders, writes Iheanyi Nwachukwu.
What factors underscore your numerous initiatives and campaigns targeted at responsible drinking?
Guinness is a household name, it is a brand that is known for quality and it has been in Nigeria for 67 years. So, for us, it goes beyond just alcohol. The whole issue of alcohol in the society, and in particular, our response to the drinking agenda, is very important to us.
While our commercial interest, investment and paying dividends and returns to shareholders are very important, success for us is more than the commercial aspect. Reputation, trust and respect are also very important. What consumers, customers and society think about us is a big part of what makes us successful.
As leaders in the alcohol industry, we want to make sure that we also lead the agenda in raising awareness about responsible drinking with stakeholders, not just consumers but communities, suppliers and the public. Alcohol has been part of the society for a long time and had been used in celebration for many centuries but if misused, it can cause harm, which is the primary basis of all the messaging on the responsible drinking campaigns that we do.
The other context is at a global level. Diageo, our parent company, is a part of the global producers and marketers of alcohol. The CEOs of global companies that produce alcohol came together and made a commitment that across the countries they operate, they will ensure that they focus on efforts that reduce the harmful use of alcohol. So, as part of Diageo, the activities that we take part in locally are a part of that bigger commitment and global collective. Also in Nigeria, we are part of Beer Sectoral Group (BSG) for beer and for spirits, we are also part of the Spirits and Wine Association of Nigeria (SWAN) and we work with these groups to tackle the misuse of alcohol.
In terms of these initiatives that you have outlined, do you not think it 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 incidences 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 we do not wear 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 it is 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 organization if we are seen to be responsible.
Recently the World Bank revealed that Nigeria has improved. You have been in the country for the past two years and mentioned a few challenges earlier on. What areas of the economy do you think have actually improved?
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 our 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 that we know what the price is, which 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 continuity of production. However, it is good to see that government wants to spend more money on infrastructure.
No doubt Guinness will like to be in Nigeria for a further 67 years and more; what initiatives are ongoing to drive that?
Despite the challenges we have been seeing in the environment, we continue to grow our business. How have we been able 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, but this is also allowing us to price these brands at the right price 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 40percent locally, now we are sourcing about 75percent 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.
What else are you doing locally to enlighten the public about responsible drinking?
The first one I’d like to mention is the Ember Months campaign carried out in partnership with the Federal Road Safety Corps (FRSC) across the country. It’s a responsible drinking campaign is targeted at commercial drivers and motorists, especially those using public transport. It aims to help them to understand the importance of not drinking when driving or about to drive. This year so far, we have launched one of the ember months campaign in Agege Motor Park here in Lagos and we will also be launching in other parts of the country, including Abuja, Kano, Benin and Onitsha, just to sensitize the commercial drivers on the risks of harmful misuse of alcohol especially when driving. We have partnered with the FRSC for the past 13 years on this campaign. In 2015, we gave them breathalyzers to enable them test drivers and this also provides a way to check that our education/awareness initiatives are working.
Secondly, this year, we are starting a radio programme where we will be giving a lot of information about responsible drinking, making people aware of the various elements about responsible drinking, for example how they shouldn’t drink if driving and how much alcohol is permitted in your body according to regulation. Our overall message to drivers is ‘Don’t Drink and Drive’ and we have mostly focused on this campaign around the ember months. However, from 2018 we have decided to extend it through the year, from January to December. This is because accidents don’t just happen towards the end of the year, and drinking doesn’t stop at the end of the festive season, it goes throughout the year.
Thirdly, for the first time ever, we will be organising structured trainings for new driver’s license applicants and fleet drivers across the country and this plays well into our education piece for responsible drinking.
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 Corp 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.
You are a large multinational doing business with suppliers, vendors, wholesalers, retailers amongst others. How do you share this message with this group of people? Do you have any programmes targeted at them?
Soon, we will be launching an initiative called Join the Pact. This is a global initiative that Diageo introduced over 9 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.
We understand that one of your global online initiatives, the DRINKiQ, has been refreshed. Can you enlighten us on what DRINKiQ is all about?
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? and 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.
Following global news, I see that Diageo has launched a new campaign called ‘Drink Positive’, what is this campaign all about?
The advantage of looking at alcohol in a positive way is to recognize 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, it 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 positive.
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 of alcohol beverage manufacturers who have come together to drive responsibility of 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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