Diageo, Pernod Ricard target Africa

19 October 2012

LAGOS: Diageo and Pernod Ricard, the premium spirits groups, are both ramping up their focus on Africa, a market characterised by a mixture of opportunities and challenges.

Diageo, the UK-based firm, has already achieved success in the region with its Guinness stout brand, but believes it is now increasingly possible to take on "hot drinks", the name for spirits made locally.

"With economic growth as it is and the emergence of a middle class that has more disposable income, we have an opportunity to move people from the 'hot drinks' that they're drinking and into international premium brands," John Williams, innovation director for Africa at Diageo, told The Spirits Business.

However, as most nations outside South Africa lack the kind of venues typically targeted by the company, and few consumers have experience of its products, a tailored approach is essential.

"We've had to take it back to basics. We're using brands like Smirnoff and Gordon's to educate bartenders in how to serve spirits, because that knowledge doesn't exist," said Williams.

"The biggest innovation we're doing is to recreate the spirits culture that exists elsewhere in the world and take it to the mainstream bars in countries like Ghana, and cities like Nairobi and Lagos."

Diageo thus launched 24 brand extensions across sub-Saharan Africa from 2011/12, focusing on pre-mixed lines. "We're trying to understand whether giving consumers the end drink experience in an easy way can accelerate their spirits consumption," Williams said.

For its part, Pernod Ricard established a presence in Namibia and Kenya in 2011, and will do so in Ghana, Morocco and Nigeria in 2012. It is was already active in Gabon, the Ivory Coast and South Africa .

"Our staff numbers in Africa are expanding on a weekly basis," said Alex Ricard, managing director for distribution at Pernod.

Among the brands enjoying growth are those within its Chivas Brothers stable, like Ballantine's, Chivas Regal and The Glenlivet, Passport, and Royal Salute.

"We see this as an opportunity; this for us is very much untapped territory," Christian Porta, CEO of Chivas Borthers, said. "But we are slightly behind our main competitor – they have a large beer business which we don't have."

Pernod Ricard is drawing on the insights it has gained from its operations in Asia and Eastern Europe, such as by creating multimarket ad campaigns that are then localised as appropriate.

"Some of the service companies you'd get in more mature markets aren't there yet," Rowan Leibbrandt, international regional manager for Africa at Chivas Brothers, said. "We're starting to see some early stage advertising agencies, but it takes some time for them to emerge."

Data sourced from The Spirits Business; additional content by Warc staff