When the news broke recently of the sack of Guinness Nigeria Managing Director/Chief Executive Officer (MD/CEO), Seni Adetu, not too many people, especially those in integrated marketing communications (IMC), were surprised. Some had anticipated it.
Having exhausted all the windows of opportunity provided for Adetu to turn around the fortunes, Diageo, owners of Guinness Nigeria, asked him to step aside until a suitable position is found for him. Industry commentators believe it was a soft landing for him to avoid embarrassment.
Two sides of sack
Adetu is said to have completed his assignment in Guinness Nigeria, but certain individuals in and outside the company still hold the opinion that he was fired. Corporate Relations Director/Company Secretary, Sesan Sobowale, insisted that Adetu was not sacked, he will assume his new role in Dublin.
“Once the handover process is completed with his successor at the end of the year, he will assume his new role, reporting into Nick Blazquez, President, Diageo Africa and Asia Pacific,” Sobowale said.
Adetu will hand over to O’Keeffe this month, and will technically report to him before his departure to Dublin in January 2015. Guinness Nigeria explained in a statement that “the details of Adetu’s next role will be subject to further announcement.”
However, experts query the manner of restructuring that would not allow a top management employee to assume his new post until after two months.
One of the factors that led to Adetu’s replacement is said to be an unimpressive bottom line. Guinness Nigeria denied this. “We never said at any forum that Adetu’s performance is the worst in the history of the company.
“In fact, Adetu has done quite well in several areas. During his time, Seni creditably led the business, successfully completed the capacity expansion project, and commenced a major transformation in the company’s route-to-consumer,” Sobowale argued.
Despite the denial, however, industry stakeholders point to the financial result during Adetu’s reign of two and a half years. Giving details of the key drivers of profit at the 2013 facts behind the figure at the Nigerian Stock Exchange (NSE), Guinness Nigeria Finance and Strategy Director, Lisa Nichols, said profit before tax rose from N20 billion to N17 billion.
“We had a positive impact from pricing. Volume was relatively flat. Our cost was quite a big factor with an increase of close to N5 billion. That included raw material inflation and depreciation on the investment that we had in our production capacity and also some mix impacts in there,” Nichols explained.
In September this year, Guinness Nigeria’s full year (end June) 2014 result showed profit after tax (PAT) declining 19 per cent to N9.573 billion against 2013. Sales declined 11 per cent and profit before tax (PBT) 31 per cent.
PBT decline was greater (than sales) due to a 13 per cent rise in interest expense to N4.4 billon offsetting a 122bp gross margin expansion. A 10 per cent decline in other income also contributed slightly. A 1,220bp decline in the tax rate to 18 per cent, however, helped the bottom line, limiting the decline in PAT to 19 per cent (versus 31 per cent PBT decline).
Generally, Guinness neck and neck on competition was an unimaginable one. Sources told TheNiche that the headquarters was very unhappy with the situation, particularly as the business considers the Nigerian market very important.
Investment in brands
Guinness Nigeria has made significant investment in its brands, which Nichols said increased from N600 million to N900 million. Sobowale added that “under Adetu’s leadership, the quality and diversity of our portfolio have been enriched with the renovation of Guinness Foreign Extra Stout and Harp, the repositioning of Dubic and Satzenbrau, the expansion into mainstream spirits and soft drinks categories, the introduction of new brands like Snapp and Orijin.
“We have won the Advertisers Association of Nigeria (ADVAN) award for best beverage innovation in Nigeria in 2014 with Orijin and sustained Guinness Nigeria’s long-standing position as one of the most reputable companies in Nigeria.”
Investigation showed, however, that it was at this period too that the market share of Guinness Foreign Stout was badly mutilated by competition. The company’s other brands such as Harp, Satzenbrau, Dubic, Alvaro, and Smirnoff have succumbed to other indicators of competition.
While new brands like Snapp and Orijin show strength in the market place, other line extensions – Harp Lime, Malta Guinness Low Sugar, Dubic, and Alvaro – are a drain pipe.
Adetu successfully presided over two significant marketing campaigns in Guinness Nigeria, The Made of More and Made of Black, that have put huge pressure on the company’s profit.
The Made of More campaign, which heralded the African Cup of Nations and the World Cup, was considered a huge success from the stand point of ‘top of the mind’. But did the campaign have any positive impact on profit?
A Lagos based financial analyst, Joseph Ntia, said “obviously, the company did not key in sales strategy and the year end result could attest to that.”
The current campaign, Made of Black, has signed on three brand ambassadors – Olamide, Eva, and Phyno – costing billions of naira, but how is the brand deploying the ambassadors to drive sales?
A former marketing manager of the company, who spoke unanimously, said “Guinness is used to breaking campaigns without keying sales strategy. Promo is not the only vehicle, there are other windows in which consumers can be engaged.”
Pirate marketing dogfight
Dublin is reportedly very upset about the N300 million budget for pirate marketing campaign to discredit competitors. “The major undoing of Adetu is that unnecessary fight instead of concentrating of driving volume.
“I can tell you that headquarters was not impressed at all. The budget devoted to that project was enough to get some dormant brands up and running but he chose to waste it,” a source disclosed.
Nigerian CEOs impasse
Nigerians have been calling on multinationals in the country to give Nigerians opportunities to drive these businesses. At some point expatriates were only those fit enough for the position of CEO.
While the crusade was hitting the crescendo, one of the Nigerians in the forefront of this agitation was given the boot as a result of non-performance.
With O’Keeffe returning to take care of the interest of his people, experts think it will take another decade before a Nigerian would be given the opportunity.
A brand communication strategist, Victor Onobo, said “Nigerian Breweries is a good case study. Former MD of NB, Festus Odimegwu, was given the boot because of the same reason, and Adetu is getting what he deserves too.”
Some multinationals said to have vowed not to allow Nigerians to occupy the position of managing director include Nestle, Promasidor, Unilever, Lafarge Wapco, and Etisalat.
Telecommunication companies were beginning to imbibe that culture but that looks to have changed with MTN Nigeria and Airtel still believing in local talent to drive their brands.