Home Interview/Opinion Tolaram’s tolerance limit for alcohol and the future of Guinness brands in Nigeria
Interview/Opinion - 4 weeks ago

Tolaram’s tolerance limit for alcohol and the future of Guinness brands in Nigeria

 

By Ikem Okuhu

Casual observers a couple of memes posted on X (formerly Twitter) on the …of June by a certain Temitayo Ponle (@Temmyponle) depicting Nigerian Breweries making a statement of its belief in the Nigerian market while mirroring Guinness as taking the exit.

 

I do not know how many of these memes were created, but I came across two. The first depicts a Heineken caricature carrying what looks like a basket while picking vegetables on a farm. The same frame mirrored Guinness in the background slouching off a stick holding a pouch on his shoulders.

 

“Oba no dey go transfer” is written in bold block letters as the headline.

 

In the second meme, which interestingly was in the same tweet, a disproportionately big-sized caricature of Heineken is standing before a battery of microphones in what looks like a press conference. One will not miss the suggestion made in this image with the two unoccupied seats painted in Guinness colours and flanking Heineken as he stands, proclaiming rather emotionally that, “We know things are difficult, but we have chosen to stand with Nigeria and Nigerians. We will go through this together and come out stronger.”

 

I tried to verify if this was from Nigerian Breweries or even the majority shareholders, Heineken, however, all my friends who understand this social media platform better could not come up with any credible connection save for the Heineken brand name on the memes. As of Wednesday, June 19, 2024, the post has gathered 63,700 views and 113 reposts. I guessed that if this campaign was from Nigerian Breweries or Heineken, it would have been squeezed for more traction than the modest reach recorded.

 

 

It was obvious that whoever was behind the post on X was trying to exploit the recent sale of 58 percent of Guinness Nigeria Plc to Tolaram Nigeria Limited to play up Heineken’s recent announcement that it rather than call in their investments following a spate of dizzying losses, it was on the contrary, working towards increasing its stake in the country. Its acquisition of Distell, a whiskey brand, and the announcement of a rights issue as a cushion for the hits it got from Nigeria’s crippling economic headwinds of the past year were the twin expressions of long-term commitment to the Nigerian market.

 

Guinness was not the only multinational to withdraw from Nigeria in the past 12 months. Before its departure, big businesses such as Procter & Gamble, GlaxoSmithKline Consumer, Unilever, Sanofi-Aventis, Microsoft, Total Energies, PZ Cussons, Kimberly-Clerk and Jumia Foods have all left the country as the climate became unbearable for business and profits. But you see, the departure of Diageo Plc through the sale of its Guinness franchise has footnotes that observers would rather not have been written in fine print.

 

Forget what you know about Malta Guinness, the vehicle carrying the brand’s basket of offerings runs on an alcoholic beverage engine, however the presentation is twisted.

 

I guess it might take a bit of time to get my drift in this article, but you see, the future of Guinness Nigeria might significantly alter following this acquisition. I have read the letter written to the Nigerian Stock Exchange on June 11, 2024, and found it impossible to believe some of the company’s claims about Diageo, the owners of the Guinness brand in Nigeria, will continue to drive the marketing strategy for Guinness Nigeria. My claim is backed by the track record of this company in the Nigerian market.

 

While it can be said Guinness has great experience in marketing alcoholic beverages, I do not see Tolaram leaving the marketing of Guinness to Diageo. The first reason is Diageo cannot recall the last time its alcoholic beverage marketing expertise put green numbers on the company’s books. It has been losses and shrinking fortunes for some time now as loss for 2023 was in the north of N5 billion. The year 2022 and a few more years down the road were not better.

 

Therefore, I do not see Tolaram, a successful marketer of a range of brands conceding the marketing of Guinness to Diageo. It doesn’t happen that way. Here is a company that has been in Nigeria nearly as long as Guinness, gathering experiences in the manufacturing and marketing of textiles, noodles, cooking oil, milk, pasta, and lately, mobile phones. I am sure most people do not know that Redmi, the Xiaomi phone currently making waves in the country is also owned by Tolaram.

 

Who would concede the marketing of a brand he owns 58 percent to a former owner who hasn’t grown the numbers over many years? It is so farfetched it has to be unrealistic and naïve even to contemplate.

 

I am also not hoodwinked by the political platitude buried in the claim that Diageo “remains deeply committed to Nigeria. No company sells controlling shares of its business in any market that can even pass the test of shallow commitment, not talking of being “deeply committed.” Diageo and Nigeria are like a married couple who do not want either the children or their neighbours to believe they are drifting apart, and will occasionally indulge in a public display of affection (PDA) even when they sleep in separate rooms in the house; they want the void between them will unravel so slowly that those watching will neither notice the separation nor feel the hurt and disappointment of seeing two former lovers’ divorce.

 

The example of Warner Bros. will help explain this. As an entertainment giant, Warner Brothers acquired Time Inc. in 1990 to become Time Warner. Before it swallowed AT&T in 2018, the Time in its name had disappeared. Even AT&T did not survive as the company is now known as Warmer Media.

 

This is why there are already concerns about job losses and reconsiderations of both wages and welfare packages. It is improbable that Tolaram will pamper its employees like Guinness in the previous era. Wages paid by the multinational brewers in Nigeria were comparable to those in their respective offices in other countries. Employees were also frequently posted to other countries where they broaden their experiences. Guinness in the past, has had some of its Nigerian employees as Managing Directors of the subsidiaries in other African countries. Nigerian Breweries, on its part, has its employees occupying various positions in the Netherlands and many countries in Africa.

 

Any employee of Guinness who is currently working in Nigeria who expects such luxury is incubating his or her future disappointment. Tolaram doesn’t look like it will run Guinness this way.

 

Tolaram, if you look at it quite critically, might also have issues with keeping Guinness Nigeria the way it is for the longer term. Do you know why?

 

Religion and Tolaram’s tolerance limit

 

The Vaswanis who own Tolaram are economic migrants who journeyed around several places selling textiles before arriving in Nigeria around 1977. With their origins traced to the Sindhi tribe in Pakistan and India, the now powerful Tolaram family comes from an area that has two dominant religions – Islam and Sikhism. It was recorded that this tribe of around 24 million people was captured by Islamic jihadist, Muhammad Bin Qasim in 712 CE.

 

Today, Muslims make up more than 90 percent of the population, while the Sikhs constitute between 5 – 7 percent. As clever as the Vaswanis have been, nobody has been able to associate them with any religion, a factor that has helped their businesses in Nigeria and in other countries where they have expanded.

 

Probes of their names however reveal some confusion. While Ishwari and Mohan, names in the Tolaram family, were identified through various searches to be Sikh names, Khanchand, the name of the father and founder of the Tolaram conglomerate idicate it can be borne by Muslims, Hindus and Sikhs.

 

Whichever of the three religions the Vaswanis adhere to, the issue of associating with alcohol stands out as a major impediment to growing the Guinness brand the way the company advertised in the letter announcing the acquisition. If the owners of Tolaram are Sikhists, they are not supposed to drink alcohol or consume any other intoxicants. If they are Hindus, their religious texts generally discourage the use or consumption of alcohol Should they be Muslims, as some suspect, considering the number of years they spent in northern Nigeria, then the sale and consumption of alcoholic beverages has to be “haram” to them.

 

If any of the three scenarios is true, what is the business of Tolaram acquiring Guinness Nigeria Plc? Do these not question the integrity of the statement issued by the company concerning the continued production of the brand under a license to Guinness Nigeria?

 

Long before the full consummation of this deal by 2025, stakeholders and consumers should start asking questions about what Tolaram paid N103 billion ($70 million) for. Was the money for 58 percent ownership of Guinness factories and other tangible and intangible assets across Nigeria or are there specific things in and around Guinness that are of strategic importance to Tolaram that are not yet made known to the public?

We will look at a few more scenarios in another article.

Ikem Okuhu, a marketing communications professional, is the author of PITCH: Debunking Marketing’s Strongest Myths.

Do you have a compelling story to tell? Contact us via our email: espinewsng@gmail.com or call/WhatsApp on 08032519246.

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