Guinness Nigeria Plc recently released its Full-Year 2020 results ended June 2021, revealing impressive top and bottom-line growth as the beer company’s Spirits Division contributed N35.29 billion to overall year-on-year revenue.
This was disclosed by the company CEO, Baker Magunda, in an Investors Presentation following the release of its full-year results. Magunda revealed the Spirits divisions, Mainstream and Premium spirits impressively grew by 75% and 121% y-o-y, respectively. The mainstream spirits include Gordons, Baileys, Smirnoff, McDonalds and Orijin spirits. On the other hand, Premium spirits are The Singleton and Black Label.
According to the financial highlight, sales from the Spirits division assisted growth in overall revenue by 22%, representing N35.29 billion, during the period.
The financial highlight revealed that the spirits division has recorded continuous growth in two years, from 2018 to 2020. In 2018, the division’s contribution to revenue was 17%, taking it a notch higher, it contributed 18% growth to revenue in 2019. In 2020, the division contributed 22% to revenue, reflecting a 29.41% increase in the Spirits division contribution to overall revenue in two years.
However, Beer division, the largest contributor to overall revenue declined by 2.63% in two years and contributed 37% to the 2020 FY revenue, representing N59.53 billion. Nigerians have increasingly gravitated towards spirits in recent years an area seen as high margin business for spirit distributors.
In addition, Malts division, the second-largest contributor to the overall revenue, declined in its contribution by 8.11% in two years and contributed 34% to 2020 FY revenue, representing N54.54 billion, while Return on Trading contributed 7% to revenue, representing N11.23 billion. The Malt drinks include Malta Guinness and Smirnoff Ice Malt.
The increase in the contribution of the Spirits Division can clearly be attributed to the increase in the consumption of the brand of alcohol.
The reopening of businesses and laxation of restriction on gatherings could have also contributed to the increased demand for their products, hence, assisting revenue growth.
The revenue reported during the period was supported by increments in the prices of the products which mitigated and cushioned the company against the effect of inflation, according to the financial highlights.
However, the period witnessed currency devaluations which were a result of the shortfall in oil revenue, hence, resulting in FX scarcity. The forex devaluation played a part in subduing the company’s profits.
Guinness has gone through a turbulent five years recording dwindling margins and lean profits. The company has also undergone management changes as it restructures its business operations for the competition and challenges ahead. The company has quietly restructured its workforce recruiting younger, smarter executives which it rotates across its African businesses. Investors have rewarded Guinness for its ongoing turnaround with its share price returning 63% year to date.