Mr. Peter Ndegwa, Managing Director/Chief Executive Officer of Guinness Nigeria Plc, is on his way out of the company for a bigger assignment in the Diageo Group. He tells Bamidele Famoofo, in this interview, that there is no better time for him to exit Guinness than now, when the company is in a great shape. Excerpts:
The hottest news about Guinness Nigeria at the moment is that you are moving on to a new role. Tell us a little more about this.
I have been in Nigeria for almost three years and in Diageo for 15 years. I am now moving into the role of GM, Continental Europe and Russia based in the Netherlands. It has, indeed, been an exciting time here in Nigeria and while I am excited about the new role, I will miss Nigeria.
How do you feel moving on from Nigeria to Europe?
At Diageo, we view talent as international. I have spent half of my working life, 14 and a half years, outside my home country, so I am used to working in foreign countries. I think it is an opportunity to learn and to actually bring diversity, different perspectives, and also to appreciate what that country is about. I spent many years in Europe in other roles, although, that was in the UK. It will be good to reconnect with Europe once again.
How do you think the business is doing now? Do you think this is a good time for you to step down?
This is a planned move, so it will include a very smooth transition that will happen over several months. I have been in this country for three years and the business is in great shape, the team is very strong, the strategy is very clear, and the performance track record is very consistent. I feel there is no better time to be handing over to someone.
We have reorganised our business in order to respond to the tough environment that businesses were faced with, and also for our business to be more balanced. Three years ago, we used to be more of a premium business, in terms of offering Guinness and some of the other brands that appeal to consumers on the premium end. Today we have a much more balanced business. We have gone into the local production of spirits. We also have a portfolio of spirits that we import. So we are in several categories of spirit, beer and adult soft drinks, across different price tiers. Our portfolio is more balanced; our commercial execution is very strong. Productivity and cost management have also really transformed and that is translating into very strong top line growth. We recently announced our results for the nine month period ended March 31, 2018, where we grew our business by 17 per cent. This translates into very significant turnaround, supported both by the work we have done in the portfolio by giving consumers choice, but also the restructuring we have done around our balance sheet with the Rights Issue, for example.
In addition to that, we have set up a team for the future. Previously, we relied on a number of international assignees, but today we have very strong local talent. Fifty per cent of the leadership team is female, so we have really created a team that is diverse and very strong and I see it as a team for the future. So when you look at all these factors, this really is the best time to be handing over the business to an experienced CEO, such as Baker, who I know well and I have worked with in the past. I see this as an opportunity to give a different person a chance to continue to drive that legacy but also take it to a new level.
With Nigeria witnessing a lot of competition in the alcohol industry, how do you think the industry will fare over the next five years?
Competition is always expected when you are in business. We are the only total beverage business in Nigeria offering beer, spirits, and soft drinks at various price points from premium to the more affordable segment. There is no other business in this country that has brands in those three segments; we believe we have competitive advantage.
In the beer category, competition is increasing, but as I earlier mentioned, we have expanded our portfolio and have become more competitive on both the portfolio offering and route-to-consumer. The other aspect that gives us competitive advantage is our entry into spirits production locally. We were not previously represented in the spirits segment, but we have now installed local production capacity to produce international brands, such as Smirnoff, Gordonâ€™s, and McDowell, with more in the pipeline. This gives us a range of brands and makes us more competitive. So we will not be competing only in beer segment, but also in the spirits and soft drinks segment.
Â During the recession, some analysts reported that spirits performed better than beer in terms of consumption. Can you explain why tDuring recession consumers adjust to brands that they can afford because they have less money available, both in beer, spirits and in soft drinks. We found that consumers down traded into price points which they could afford across all the three categories and not just in spirits. Our strategy is to ensure that we are represented in all these segments at various price points, all the way from premium to affordable. For example, we have brands, such as Johnnie Walker Blue, and Gold, which appeal to consumers who can afford higher priced brands. Also, we have brands that are further down the line and are more affordable, like Smirnoff X1, Gordonâ€™s Dry Gin with Moringa, etc. These brands are quality brands that are priced right and provide options to imported brands, which tend to be more expensive because of cost of importation and transportation. As such, we are able to make sure that consumers can afford our brands. In whichever category you operate, the brands have to be affordable and we believe that there is an opportunity in the beer, spirits and soft drinks segments.
What would you identify as the highpoints of your time at the helm of affairs at Guinness Nigeria, and your greatest achievements?
Some of my best moments in Guinness Nigeria revolve around our talent. It is important that our business reflects our society and so focusing on the diversity of our team and on building local talent has been one of my biggest moments. It has been great working to ensure that the organisation really leverages and taps into the local talent base that we have in this country. The diversity that we can create and the opportunities that it gives is a critical part of the successes that we enjoy as a business. Most of our customers, distributors and retailers are actually females, so we should also have our employee base reflect that. The other highlight is going around the country and discovering what Nigeria is. I really pride myself on having visited 20 states across the country!
What are your final thoughts on the potentials of the Nigerian economy as you depart Nigeria?
It is great to see Nigeria coming out of recession and to see the oil price looking stable, therefore, allowing the government to have more capability to invest in the country. There have been some painful moments in the past couple of years, both for consumers, for companies and also for the wider society. But it is good to see confidence coming back and the economy starting to turn around for the best. I believe that this country has a huge potential, being the largest economy in Africa. I love the fact that Nigeria has very vibrant, very entrepreneurial people who want to push the boundaries and discover new things. It will continue to attract a lot of attention from international investors.
In spite of the challenges of the past few years, we remained committed to investing in the market. For example, we invested behind our spirits production, in new formats, etc., especially in areas that we previously did not have a strong presence. In Nigeria, the per capita consumption across both beer and soft drinks segments is still relatively low and as the economy recovers, consumersâ€™ affordability will improve. For us, the Nigerian economy still holds much promise â€“ we have belief in Nigeria and we are long-term investors.
What would be your advice to your successor, Baker Magunda?
Baker is coming into a lovely country with vibrant people and the largest economy in Africa. It is the place to be. He should understand that this country is huge and he should try and explore the geography of the country. I have been to about 20 states in the country in the three year period that I have been here. By understanding what happens around the country, you can tailor offerings to the regional blocks, depending on preferences. Although, it is one country, there are different cultures. So understanding the culture is important as well. It is also important to continue to contribute beyond commercial interests into areas, such as Alcohol in Society, shaping diversity, and giving female employees career growth opportunities.