GUINNESS NIGERIA ENTERS SPIRIT MARKET

Guinness Nigeria PLC will be entering the spirit market in Nigeria from January after coughing out N2.35bn for exclusive distribution of Diageo PLC  brands.
According to notice sent to the Nigerian stock exchange, under the new arrangement Guinness Nigeria will take over various assets including inventory and existing markets for the brands in Nigeria.
According to Mr Peter Ndegwa, the managing director. the deal is to facilitate Guinness Nigeria involvement in all segments of the drinks market in Nigeria. Currently it is involved in beer brewing and sale; production of nonalcoholic drinks  and ready to drink products.
Diageo, says Ndegwa  will thus release its hot drinks into the existing Guinness Nigeria portfolio which allows it to " compete within other cross segments within the market"
However, Diageo PLC remains the majority and controlling shareholder in Guinness Nigeria, so the whole thing almost seems like fixing and paying the price for the spirit  brands all by itself.
Of course that is not to imply that it is over or under priced neither does it attempt to underrate whatever contributions the new exclusive distribution rights could make to Guinness Nigeria's bottom line.
These are things worth watching out for in the near future as market reception figures get incorporated into present day returns.
Meanwhile figures for the first quarter to September 2015 did indicate that Guinness Nigeria could do with more products with good profit margin. It recorded 2% growth in main line trade in the quarter that was accompanied by 18% increase in cost of sale
Added to other factors, this resulted in 74% drop in profit before tax to N517.6m from N1,962.3m clocked in the first quarter of last financial year to June 2015.

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