LONDON Oct 15 Diageo, the world's
biggest spirits group, should see sales growth in Africa
accelerate as it expands into new markets like Ethiopia and
Angola and rising incomes enable traditional beer drinkers to
try spirits, it said on Tuesday.
Africa currently generates 1.4 billion pounds ($2.2
billion)in annual sales for Diageo, accounting for 12 percent of
the group total, and sales have been growing at a compound
annual rate of 13 percent over the past decade.
"I fully expect that over the long term to be the same, if
not accelerate," said Nick Blazquez, Diageo's president for
Africa, Turkey, Russia and Central and Eastern Europe.
The lion's share of Diageo's sales in Africa come from
Kenya, Nigeria and South Africa, but as it expands in places
like Ethiopia, Mozambique and Angola, the rate of growth should
increase, Blazquez told reporters ahead of a meeting on Tuesday
with investors in London.
The meeting was meant to be in Nairobi, but Diageo moved it
to its home city after last month's shopping mall siege in which
Islamist gunmen killed 67 people in the Kenyan capital.
Most of what Diageo sells in Africa is beer, both local
brands like Tusker and Serengeti, and its global brand Guinness.
The bigger opportunity, therefore, lies in spirits, which
Diageo is pushing at many of the locations it already sells
beer. In addition to its premium, international brands like
Johnnie Walker Scotch and Smirnoff vodka, Diageo sells
value-priced brands like Jebel gin.
Africa has become a key battleground for consumer companies
hoping to offset weakness in Europe and North America. French
spirits group Pernod Ricard recently increased its
Several consumer firms with big emerging market presences,
including Diageo and Unilever, have come under pressure
recently due to slowing growth and falling currencies.
"There will always be ups and downs in emerging economies,
and I would caution us not to be over-optimistic. But do I think
Africa will accelerate faster than Asia? Yes I do," said
Diageo gained strong footholds in key markets like Brazil,
Turkey and China by buying local spirits brands. That strategy
could work in Africa as well, Blazquez said, say for a popular
brand of bitters, if it could provide scale and a strong brand.
Diageo aims to make half of its turnover in emerging markets
by 2015, up from 42 percent now.