Guinness Presentation by James Piper_Traci Santillanes_Terrence Smith_Mark Susor_101813

GUINNESS – NIGERIA

Global Business Project

TEAM S&P:Mark Susor, Terrence Smith, Mick Piper, Traci Santillanes



1759 – Guinness first brewed by Arthur Guinness in Ireland – Guinness signed a 9,000 year lease

1769 – Guinness exports begin to England

1870 – 10% of all Guinness sales are overseas

1886 – Guinness becomes public company: London Stock Exchange

1960 – Guinness-Nigeria first brewery outside Britain and Ireland

1997 – Guinness, Plc. & Grand Metropolitan for Diageo, Plc.

2013 – Number 1 stout in the world



The company originated in Ireland in 1759 and began exporting early on. However, their first independent brewery built outside of Ireland and Great Britain was in Nigeria in 1963.

Guinness has been highly successful in sourcing capital where it is the cheapest, production where it is most cost effective and sales where they are most profitable. Each country’s competitive advantage has been useful in the production of goods and services to produce and deliver Guinness on a global scale.



Political SystemsPresidential, democratic, collectivismBritish Commonwealth

Economic SystemsMixed economyagriculture, trade, oilprotectionist attitude

Legal SystemsCommon LawTheocratic – IslamContracts – detailed w/spelled out contingencies



Culture and Social Structure40% Christian, 50% Muslim, 10% Indigenous

High poverty levelsIncrease in Liberalism

Language & EducationEnglish – official language

Low level of formal education

Corruption & Moral ObligationTerrorist activities, sectarian conflicts, public mistrust

High levels of corruption due to oil trade & poverty



LocationMajor port, west Africa w/access to North & South America

Absolute Comparative AdvantageLarge land mass

Large and growing population

Economies of ScaleDiageo, Plc worldwide scale & experience

2nd largest Guinness market in the worldLeveraging of parent company global supply chain



Tariffs, Subsidies, QuotasImport substitution industrialization strategy

Quantitative restrictions, high import dutiesProhibition of barley

Policy ImplicationsIslam prohibits the sale and consumption of alcoholNo legally binding regulations on ads, sales, placement

FDI StrategyAvoidance of political & policy changesCreation of employmentAbolishment of transportation costs



Government PolicyBlocking of barley importsSorghum used as substitutionBrewery purchases farm ground

Economic Integration OpportunityShortening of supply chainAbolition of tariffs and non-tariff restrictionsCost reduction

Foreign Exchange RiskIreland-British Pound, Nigeria-British PoundVery little exchange risk



Exchange Rate ForecastingCurrency fluctuations were minimal at the time of entry

Currency Management StrategyNigerian Central Bank utilizing recommended IMF

reforms, fiscal and policy to enable a more stable currency environment

Strategy used for Global ExpansionGuinness began as an exporter, evolved to localized strategy, which has transitioned into a global standardized strategy



Value ChainStrategic partnerships in sourcingPremier technologyISO Certifications in food safety and environmental standards

Profiting from Global ExpansionTransference of core competenciesSame key ingredients since 1759

Entry StrategyThe Guinness Trading Company – created demandFully operational localized brewery/distribution



Entry ModeLocalization strategy

Customization of goods and services

Import and Export Strategy & FinancingExport strategy initially allowed Guinness to protect

intellectual property and quality control

Production StrategyStrict protection of secret recipe

No deviation from standardized ingredientsQuality relationships with existing agri-business



Outsourcing DecisionsHops only grow between 35° and 55° N and S of the

equatorOnly registered farmers are allow to grow Guinness hops

Market Segmentation and StrategyOffering certain brands to different economic classes

Targeting the majority middle class

Advertising StrategyFocusing on non-Muslim consumers

Conservative ads to deter offensiveness



Pricing StrategyUse of same four ingredients since 1759

Identical processing in every location

Management Training & Staffing: Policies & Strategy

Partners for Growth – leadership communication

Diageo Academy – global learningGovernance & Remuneration CommitteePublically Traded Companies Policies & Internal Controls





Guinness Nigeria Plc.



Was Guinness successful: Currently in over 150 countries, brewed in over 60

10,000,000 glasses poured every day

40% of all Guinness global sales come from Guinness Nigeria

Guinness provides DRINKiQ education – powerful Community Partner

Funds scholarships for “Water of Life” initiatives

Donates to a variety of engineering scholarships, community projects

Practices a balanced cross-culture literacy business model

Ethically promotes & produces

How: sourcing capital where it is cheapest

producing where it is most cost effective

selling where it is most profitable

standardization of recipe, operations, price, placement and promotion



References

Adeyemi College of Education (2013). Electronic source retrieved from: http://www.aceondo-

ng.com/

Bashasha, B., Dannson, A., Ezedinma, C., Kirsten, J., Reuben, T., & Satorius, K. (2004).

Strengthening farm-agribusiness linkages in Africa. FAO Corporate Document

Repository. Rome: Food and Agricultural Organization of the United Nations.

Electronic source retrieved from http://www.fao.org/docrep/008/y5785e/y5785e0c.htm

Buillion. Central Bank of Nigeria. Board of Governors. (2013). Overview of exchange rate

management in Nigeria from 1986 to date. S. Okugbue (Ed). (Bullion ISSN – 0331 –

7919). (Volume 30, No. 3). Retrieved from

http://www.cenback.org/OUT/PUBLICATIONS/BULLION/GOV/2007?2007?BULL%

20JUL-SEP06.PDF

Central Bank of Nigeria. (2013). Currency Management. Retrieved from

http://www.cenbank.org/Currency/legaltender.asp



Corporate Nigeria (2011), The Business, Trade and Investment Guide – Beer Industry. Electronic

source retrieved from http://www.corporate- nigeria.com/index/industry/beer-

industry.html

Dannson, A., Ezedinma, C., Wambua, T., Bashasha, B., Kirsten, J. (2004). Strengthening Farm-

Agribusiness Linkages in Africa. Summary results of five country studies: Ghana,

Nigeria, Kenya, Uganda, and South Africa. Agricultural Marketing, Management and

Financial Services (AGSF). Agricultural Support Systems Division. Food and

Agricultural Organization of the United Nations Rome 2004. AGSF Occasional Paper 6.

Embassy of the Federal Republic of Nigeria (2013). Nigeria: Past, Present and Future. Electronic

source retrieved from: http://www.nigeriaembassyusa.org/index.php?page=nigeria-past-

present-and-future

Global Integrity Report (2010), Global Integrity Report: Nigeria – 2010. Electronic source

retrieved from: http://www.globalintegrity.org/report/Nigeria/2010



References

Guinness Nigeria Plc. (2013). About Guinness Nigeria. Electronic source retrieved from

http://www.guinness-nigeria.com/AboutUs/Default.aspx

Guinness Nigeria Plc. (2012). Annual report. Electronic source retrieved from http://www.guinness-

nigeria.com/Investors/

Guinness Storehouse. (2013). Genealogy. Hanson, S. (2007). Electronic source retrieved from:

http://www.guinness.com

Hill, C. W. L. (2011). Global Business Today. In J. Gordan & J. Weimeister. 7th. Ed. p. 52.

New York, NY: McGraw-Hill/Irwin.

Nigeria’s Creaky Political System, Council on Foreign Relations. Electronic source retrieved

from http://www.cfr.org/nigeria/nigerias-creaky-political-system/p13079

Nigeria. (2013). The Heritage Foundation. Electronic source retrieved from:

http://www.heritage.org/index/country/nigeria#rule-of-law



Nzeka, U. & Rondon, M. (2011). Exporter Guide for Nigeria. Global Agricultural Information

Network. Electronic source retrieved from:

http://photos.state.gov/libraries/nigeria/487468/pdfs/E_Guide.pdf

Osuntuyi, K. (2013). Alcohol in Nigeria. Ojay Says: Social and Political. 2013: July 29. Electronic

source retrieved from: http://ojaysays.wordpress.com/2013/07/29/alcohol-in-nigeria/

Razaq, A. (2010). Nigerian Brewing Sector: Brewing Growth; Malting Value. Vetiva Capital

Management Limited. Electronic source retrieved from: http://www.naijalowa.com/wp-

content/uploads/downloads/2010/11/Vetiva-Research-Brewery-Sector-2010.pdf

Stoddard, E., Ohuocha, C. (2012). Africa Beer Sales Surge Despite Church and Mosque. Reuters.

Johannesburg/Lagos: Fri Aug 31, 2012, 6:57pm EDT. Electronic source retrieved from:

http://www.reuters.com/article/2012/08/31/us-africa-money-idUSBRE87U0Q720120831

U.S. Department of State (2013). U.S. Relations with Nigeria. Electronic source retrieved from

http://www.state.gov/r/pa/ei/bgn/2836.htm

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