A Brewer’s Confession:How Diageo Thrives in Ethiopia




Born and raised in Leicester, in the UK, Andy Fennell, current president and chief operations officer (COO) of Africa with Diageo Plc, was in Ethiopia last week. Diageo Plc – the largest liquor company in the world – bought Meta Abo Brewery from the Privatisation & Public Enterprises Supervising Agency (PPESA), two years ago. Andy Fennell believes that the best route to growth is by focusing on people and maintaining the highest standards in execution. PepsiMax and Carling Black Label are among the world’s best beverage brands Andy has worked on and created a reputation for driving rapid growth. Andy was appointed chief marketing officer in October 2008. He then became the president and COO of Africa, effective from July 1, 2013. In this interview with BINYAM ALEMAYEHU, EDITOR-IN-CHIEF, Andy discusses the competition Diageo has faced in Ethiopia, marketing strategies and various other related issues about the Company.

 

Fortune: Compared to Southern and Western Africa, Diageo’s penetration in Eastern Africais still slow and limited. What strategies have you devised, in order to penetrate the market in Eastern Africa?

Andy Fennell: We have been in Africa for a long time. In fact, it was 1862 when the first importation of the brand Guinness went to Sierra Leone. You are right that we have a larger business presence in certain parts of Africa compared to others.

Actually, inKenya, we have very big business. For the rest ofEastern Africa, however, we are just starting. Our strategy is to build local brands and then supplement them with our international global brands.

We have seen that inTanzaniawith the acquisition of the Serengeti Breweries and then, of course, here inEthiopiawith the acquisition of Meta Abo.

Q: Diageo has recently launched the non-alcoholic beverage, Malta Guinness, in Ethiopia, which has already been on sale in around 15 Eastern, Southern and Western African countries. How has this helped Meta Abo Brewery to circumvent the stiff competition it has been facing in the production and sale of its alcoholic products?

Malta Guinness is a fantastic drink. For people who do not take alcohol, it is pretty interesting. Even for those who take alcohol, it is also regularly enjoyed.

It is going pretty well, even though it is only a month or so since the launch here inEthiopia.

As far as the competition is concerned, we are confident that we will prevail in the market. Our ambition is to make Meta the biggest brand inEthiopia. We believe that this may take a little while.

The people will certainly remember when Meta was the biggest brand. So that is our goal – to get it back to where it was.

Q: Would  you say that the competition has triggered the launch?

The competition everywhere is tough. That is because the beer business attracts lots of companies and they become good competitors. We actually like that.

We think it makes us all better. We will look to be innovative.

This is probably not the right time for me to reveal any particular marketing strategy we will pursue. But, you should look to see us grow our business across the country; you should look to see us broaden our portfolio over time; you should look to see us being more competitive. The evidence for that is how we operate in other countries.

Q: Although there has been a flurry of interest in Ethiopia’s beer market over the past years, the country’s per capita annual consumption is still not more than five litres. This is very low compared with Kenya’s 12 litres and South Africa’s 59 litres. How has Diageo been performing in Ethiopia in light of this?

The biggest driver of per capita consumption tends to be gross domestic product (GDP) per capita actually. This is because when people have more money, they can aspire to buy our products.

If people choose to drink alcohol and they have a little more money in their pocket, then they will opt to buy premium brands.

Therefore, our strategy is to build brands that they love, brands that are beautiful, brands that are made of ingredients sourced from local farmers. We now have relations with 1,200 farmers.

Q: Do economic indicators tell you that beer consumption is going to increase?

Well, the economic prospects forEthiopiaare very strong. Saying that, however, I do not think it is going to be a straight line. I think there will be some volatility.

But then our investment strategy is long-term. We have demonstrated all over the world that when we enter a country, we are long-term investors.

We believe that the prospects forEthiopiaare fantastic. We think the investments and infrastructure that the government is making will help. We think that the encouragement of private enterprises will help. We also think that access to foreign exchange will grow.

As the infrastructure improves, our business will benefit. People will also benefit.

Q: There is claim by some, such as Action Aid’s 2013 Report on tax havens, that governments’ trust in foreign direct investment (FDI) is decreasing, since companies like Diageo operate with the help of subsidiary companies working in tax heavens. It is said that countries like Ethiopia are not deriving as much benefit as they should. How do you react to this?

It is quite the reverse actually. We believe that doing good is good for business. That emanates from our stance on ethics. We believe that we only have to do business the right way, always. It also stretches to our attitudes of investing in things like capacity.

We will have doubled the capacity of the brewery by the end of 2014, compared to the one we purchased. That is direct investment.

We have employed 100 people since the acquisition. Seven new graduates have just started. We are working with 1,200 farmers, bringing fresh water to 40,000 people.

This is all based on our belief that doing good is good for business.

It is not because we are altruistic. It is rather because we believe it is the cycle we want to create. We believe that economic development is about working with the community and the government.

It is also about building brands that people like. It is about building business that helps people. That is our strategy. It has worked in several places.

Q: Little has changed in terms of marketing strategy since you came toEthiopia. Is that because the market is unresponsive or because you lack interest towards this?

Well, we have been doing well so far, because we have grown our market share. And that is the ultimate test of whether we have been successful.

We will look to grow our business. We will also look to innovate with our marketing strategies and portfolio.

We do have interest in the market and that is why we work to develop our share in it. And, in fact, it has been very responsive. So we will certainly succeed with our strategies.



Published on September 29, 2013 [ Vol 14 ,No 700]


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