Guinness Exits Nigerian Market After Staggering N61.9 Billion Loss, Sells Controlling Shares To Tolaram Group

Breaking News: Guinness to Exit Nigerian Market Amid Economic Struggles, Sells Controlling Shares To Tolaram Group

Guinness Exits Nigerian Market After Staggering N61.9 Billion Loss

In what Nigerians call a significant shift, Guinness, a longstanding presence in Nigeria since 1950, has announced its decision to exit the Nigerian market. The company will sell its controlling shares to Singaporean conglomerate Tolaram Group, marking the end of an era for the iconic brewery brand in the country. This decision comes after Guinness Nigeria recorded a staggering N61.9 billion loss after tax between July 2023 and March 2024, amid a challenging economic climate under President Bola Tinubu’s administration.

The economic turbulence was further amplified by President Tinubu’s decision to float the naira, aimed at unifying the currency’s value in official and parallel foreign exchange markets. However, the move backfired, causing severe financial setbacks for many multinational companies, including Guinness Nigeria. The company reported a dramatic N61.7 billion loss after tax in the third quarter of the fiscal year, a stark contrast to the N5.9 billion profit recorded in the same period the previous year.

The continuous depreciation of the naira has been a significant factor influencing Diageo, Guinness’ parent company, to sell its 58.02 percent majority stake to Tolaram Group. In a statement released on Tuesday, the company confirmed the agreement.

“Under the terms of an agreement signed today, June 11, 2024, Tolaram will acquire Diageo’s 58.02% shareholding in Guinness Nigeria royalty agreements for the continued production of the Guinness brand and its locally manufactured Diageo ready-to-drink and mainstream spirits brands,” the statement read.

Guinness Nigeria Plc, listed on the Nigerian Stock Exchange, was incorporated on April 29, 1950, initially importing Guinness Stout from Dublin. Over the years, it has become a staple in the Nigerian market, but with Tolaram’s acquisition expected to finalize by 2025, Guinness will have completed a 75-year journey in Nigeria.

In the same statement, Guinness outlined its plan to leave Nigeria by next year, transferring operations to a third-party venture. “The transaction is expected to be completed during fiscal 2025, subject to obtaining the requisite regulatory approvals in Nigeria,” stated Abidemi Ademola, Guinness’s legal director.

Despite the sale, Diageo clarified that it would retain ownership of the global Guinness brand, which will continue to be licensed to Guinness Nigeria for the long term. This ensures that the Guinness name will still be associated with its beloved products in Nigeria, even under new ownership.

The exit of Guinness adds to a growing list of multinational companies, including GlaxoSmithKline and Microsoft, that have departed Nigeria in the past one to two years, citing an increasingly inhospitable business environment. The challenging economic conditions have made it difficult for these companies to maintain profitability and sustain operations in the country.

Diageo’s popular brands in Nigeria, such as Smirnoff Ice, Smirnoff Vodka, Orijin Bitters, Malta Guinness, Gordons Orange Sunset, and Dubic Malt, have been household names. The future of these brands under the new management of Tolaram Group will be closely watched by consumers and industry analysts alike.

The announcement has sent ripples through the business community, highlighting the pressing need for economic reforms and a more stable business environment in Nigeria. The departure of a major player like Guinness not only signifies economic distress but also raises concerns about the future of foreign investment in the country.

For many Nigerians, Guinness is more than just a brand; it’s a part of the cultural fabric. The company’s presence has been felt in various aspects of Nigerian life, from social gatherings to major events. The exit of Guinness is, therefore, not just a business transaction but an emotional departure for many who have grown up with the brand.

The Nigerian market, known for its vibrancy and potential, faces significant challenges that need to be addressed to retain and attract multinational investments. The government’s economic policies and their impact on businesses have become a focal point of discussion, especially in light of such high-profile exits.

As the transition to new ownership unfolds, employees, stakeholders, and consumers will be keenly observing how Tolaram Group manages the change and what new strategies they will bring to the table. The hope is that Tolaram’s involvement will breathe new life into the operations, maintaining the legacy of Guinness while navigating the complex Nigerian market.

The exit of Guinness from Nigeria marks a significant moment in the country’s economic landscape. It underscores the urgent need for economic stability and favorable business conditions to ensure the continued presence and success of multinational companies in Nigeria.  As Nigerians bid farewell to a beloved brand, the future remains uncertain, but there is hope that this transition will pave the way for a renewed focus on creating a more supportive business climate in Nigeria.