British alcoholic giant Diageo will increase production of spirits from its Kenyan plant to meet rising demand from Nigeria and other African countries. The company will spend $13.38 million on new investments including a new 20,000 distillery line at its Kenyan plant, which will double its production capacity. In addition, it will include more local content in Captain Morgan spiced rum, as well as push more volumes to regional markets.

Why the move ?

Nigerians have increasingly turned to cheaper alcoholic options, due to declining incomes. Fellow brewer, Nigerian Breweries had also admitted facing the same challenge, and has since switched to more low cost brands in its stable. The younger generation, has also taken a less of a liking to heavier products such as lagers.

Diageo was formed in 1997 from the merger of Guinness and Grand Metropolitan, is one of the world’s largest producers of spirits, wines and beers. The company is listed on the London Stock Exchange. Diageo had 2017 revenues of 18.11 billion.

Guinness Nigeria, was established in 1962 and listed on the Nigerian Stock Exchange (NSE) in 1965. From its Ikeja brewery, the company expanded to facilities in Benin and Aba.

The company has the past few years rocky, due to a foreign exchange crisis which forced to rely on its parent company for a dollar denominated loan. Guinness closed at  N103 in today’s NSE session. Year to date, the stock is up 9.57%.

 

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