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Is the Brand Losing Its Power? Guinness Nigeria BÜCHLER, BOYER, DOBRINEVSKAIA, FRÖHLICH, MARTUCCI (2017) GUINNESS NIGERIA – IS THE BRAND LOSING ITS POWER? 17-1230 EN Guinness Nigeria – Is the Brand Losing its Power? Case study Reference No. 17-1230 EN This case was written by Pierre Boyer, Anastassia DobriNevskaia, Sara Fröhlich, William Martucci under supervision of Prof. Dr. Jan-Philipp Büchler, at the HEC Paris. © 2017, CASEM, FH Dortmund, Emil-Figge-Str. 44, 44227 Dortmund, Germany No part of this publicatioN may be copied, stored, traNsmitted, reproduced or distributed iN aNy form or medium whatsoever without the permission of the copyright owner. Abstract The study illustrates the backgrounds of Guinness Nigeria Plc. Positioning in Africa. The major goal is to develop knowledge about strategy development and marketing strategies in that particular market. Therefore, studeNts get iNsights about the situation and development in Africa, current business model auf Guinness Nigeria Plc. and general information about the market and competitors. The case has an open question structure, so that it can be used for different learning objectives. Learning Objectives • Brand positioniNg • Brand identity • Local adaptation vs. global integration of marketing activities Target Group This case study is intended to be used at universities for students studying business administration or interNatioNal maNagemeNt with specializations in the field of strategy development. Guinness Nigeria – Is the Brand Losing its Power? 0 BÜCHLER, BOYER, DOBRINEVSKAIA, FRÖHLICH, MARTUCCI (2017) GUINNESS NIGERIA – IS THE BRAND LOSING ITS POWER? 17-1230 EN How the Market Position Established by Guinness Nigeria Plc. is Beginning to Crumble. February 2013, the Super Eagles, the Nigerian soccer team, just won the AfricaN Cup of NatioNs aNd you can fiNd the same black poster everywhere iN Lagos: "Guinness believed in the Super Eagles, we dared the impossible. Now it’s time to celebrate!" We? Last time we checked Guinness was an Irish brand, with a lucky green leprechaun as an emblem, drunk in all the dark pubs of Dublin. Not anymore! Ghana, Nigeria, Ivory Coast, Kenya or Cameroon have two things in common: they are all AfricaN couNtries aNd they all beloNg to the top ten GuiNNess markets iN the world. Throughout the years, Guinness has succeeded in building a brand new image in Africa, far away from the greeN meadows of its youth, aN image persoNified by the first AfricaN TV actioN hero every living soul kNows over there: Michael Power. This black super hero embodies the AfricaN dream come true. Thanks to him, Guinness has become a symbol of strength and adventurous spirit everywhere iN Africa, associated with vitality, potency, aNd even fertility to some people: GuiNNess is AfricaN! Yet, as Seni Adetu, CEO of Guinness Nigeria Plc. aNd James Buhari, oNe of his frieNds aNd also shareholder of the company, are watching a rerun of the glorious victory of the Super Eagles in a pub downtown Lagos in summer 2014, they tend to disagree on the current situation of Guinness in Nigeria. “What a wonderful success, my dear James! Nowadays, the whole world has its eyes on the Super Eagles and what they see is that Guinness is here to support them, not as a foreign investor, but as a successful African company! We made it my friend, we are the Super Eagles of beer in Africa!”, appreciated Seni Adetu. But for Mr. Buhari the success had a bitter taste: “Seni, I am glad you are congratulating yourself, but I’m not quite as excited as you are! When I first bought my shares, they were very profitable. These profits have been decreasing over the past years and I have the feeling that by now they are diminishing at an incredibly fast pace. Additionally, I heard the situation is going to be even worse for 2014. Tell me, Seni, what is wrong?”. “Come on, don’t worry James, things are fine, enjoy the game!”, answered Mr. Adetu, as he was hard-pressed by his friend’s question, but he promised himself he would find a proper response to give him. Background in Africa GuiNNess’ coNquest of the AfricaN market is deeply intertwined with the creation of Foreign Extra Stout (FES), which is the only Guinness one can find in Africa in the regular distribution circuit. It is a very stroNg beer (almost 8° compared to the 4-5° of regular beer) with a bittersweet, burnt 1 BÜCHLER, BOYER, DOBRINEVSKAIA, FRÖHLICH, MARTUCCI (2017) GUINNESS NIGERIA – IS THE BRAND LOSING ITS POWER? 17-1230 EN chocolate taste.1 At first, FES was created aNd brewed iN IrelaNd iN order to be exported to the Caribbean. However, the people there did not really appreciate the creamy taste of their Guinness due to the heat. In 1827, they decided to ship a few cases to Sierra Leone: this was the point at which a tremendous success story began. From then on, imports on the African continent were growing, with South Africa being Guinness third biggest export market. The wave of independences had already started among African countries wheN a member of the board, Lord Iveagh, realized somethiNg that would become the corNerstoNe of their development in Africa: Guinness would not be able to make any long-lasting profit oN the continent, if local people were Not put into a wiN-wiN situatioN and if AfricaN people could Not benefit from the success of Guinness on its own continent. This was the beginning of Guinness spirit of partnership and mutuality. In 1949, a local subsidiary in Nigeria was built up in order to deal with the imports of FES. But it was just the first step of Guinness settling down in Africa. In October 1962, with the opeNiNg of the first brewery iN Ikeja, Nigeria, overseas brewiNg of GuiNNess products begaN. The company also started managing its public image oN a coNtineNt where water is the primary Need. GuiNNess created a program called Water of Life, so as to be seen as a local player, promotiNg the growth of local economies, and Not as a foreign giant iNvadiNg merely to make profits. The driver behiNd the company's success in the market was its strength to believe in Africa, and there is oNe persoN who caN be seeN as the embodimeNt of this aspect. Lord AlaN LeNNow-Boyd was appointed Managing Director of Guinness in 1959, after years as minister of state colonial affairs in Churchill’s government. He witnessed several independences of former British colonies and was a frieNd to a few post-indepeNdeNce leaders such as NNamdi Azikiwe in Nigeria. WheN he took office in 1959, he directly uNdertook a wide program of investment in the commonwealth, as he trusted in its stability and future prosperity, something no one dared to do at that time. He expanded local brewing and when he retired in 1967, more than 40% of FES sold in Africa was brewed in Africa. Today, this rate is almost 100%. Over time, Guinness stayed and kept investing in Africa despite everythiNg, even iN the 1980s, when the ecoNomy collapsed after years of Civil War aNd GuiNNess lost two-thirds of the market in a decade. In 1992, Guinness invested £15 million into Nigeria and everybody thought it was pure madNess.2 But it was Not, and these huge iNitial iNvestments are responsible for its bright situation later on. The Company's Current Business Guinness' Positioning 1 Cf. Griffiths (2014), p. 141-142. 2 Cf. Griffiths (2014), p.153. 2 BÜCHLER, BOYER, DOBRINEVSKAIA, FRÖHLICH, MARTUCCI (2017) GUINNESS NIGERIA – IS THE BRAND LOSING ITS POWER? 17-1230 EN InflueNced by the iNtegrative approach when enteriNg the African market as well as the long, locally intertwined history of the compaNy oN the coNtineNt, GuinNess Africa is, in geNeral, perceived as an icoNic AfricaN compaNy, which offers high quality braNds. IN maNy parts of Africa, it is recognized as a local brew. Today, the product portfolio of GuinNess coNsists of four major segmeNts: spirits, beer, ready-to-drink, and non-alcoholic beverages. The spirits category includes eight products: The Johnnie Walker series comprised of Johnnie Walker Black, Red, and Blue as well as Baileys, Smirnoff Vodka, Ciroc, OrijiN Bitters, and Master’s Choice.3 The beer segment, Guinness' most famous one is the part of the portfolio, which most stroNgly focuses oN the AfricaN market. It coNsists of the Guinness FES, Guinness Extra Smooth, Harp, Dubic, and Satzenbrau. The Guinness Stout was first imported into Nigeria in the 19th century. In 2005, the GuiNNess Extra Smooth followed iNto the NigeriaN beer market. With the Harp Lime, a New flavored Harp beer was launched in Nigeria in 2011. Entirely in line with GuiNNess’ great Nigerian heritage is the Dubic Extra Lager, launched in 2012.4 Thirdly, the ready-to-drink segment contains Smirnoff Ice, Snapp, and OrijiN.5 Last but not least, Malta Guinness and Malta Guinness Low Sugar represent Guinness’ non-alcoholic beverage segment. The latter was launched in 2012 as the newest of all products in the Guinness portfolio.6 For Guinness, the importance of the non-alcoholic segment is remarkable. It allows the company to target populations in countries where religion plays a significant role, which is also the case for Africa. Through non-alcoholic beverages, the product line can be suited to the demand of religious customer groups, who often avoid the consumption of alcohol. Today, this type of customers constitutes a promising market for GuiNNess. With respect to GuiNNess’ brand and product portfolio, it is inevitable to state that its pricing strategy certainly deviates from that of its major competitors. In view of the financial means of the African respectively Nigerian population, Guinness positions itself as high-priced quality beer.
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