Diageo recently celebrated 20 years, following a merger between Grand Metropolitan plc and Guinness plc in 1997. The company, which has continued its expansion across the continent enjoys a rich history, which goes as far back as the 1890s, when Johnnie Walker first arrived in Kenya. Over the two decades of its operation as Diageo, the company has learnt lessons about the peculiarity of Africa, among other lessons communicated by its President on the continent John O’Keeffe
Lesson 1: Everything is a cycle; keep investing
Business cycles are the “ups and downs” in economic activity. This is defined in terms of periods of expansion or recession. Africa is a little more volatile than most markets Diageo currently operates. But lessons learnt over the past two decades has ensured Diageo’s business in Africa continues to thrive.
“I guess we have been in Africa for quite a long time and we have learnt everything is a cycle, and that it’s worth staying confident through the cycle, investing through the curve … stay committed to the business like in Nigeria we continue to invest in Nigeria; because we know the long-term opportunities in Africa is intact,” says John O’Keeffe.
Lesson 2: Success depends on domestic value creation
Value creation is the primary aim of businesses, but only few international businesses focus on localised value creation. Diageo is committed to creating value in Africa, the continent responsible for 12 percent of its business.
“What we have learnt as a global operator to really mind the local insight and so I think in terms of our 20-year journey, we have our innovation playing a key role for us, particularly over the last few years. Innovation that comes from about 20-22% of our business last year improved about 20% and a lot of that was driven on local insiders, local intervention and tapping into local norms that exist in Africa.
“We all know Africa; people talk about Africa but there is a huge diversity that you need to really talk about. Even within a country like Nigeria, there is a huge diversity of consumers. So we have learnt not to generalise consumers and not to generalise too much about Africa. We have learnt the power of tailoring our portfolio; we have learnt the power of innovation against local insights.”
Lesson 3: Be part of the fabric
Diageo claims it is not all about selling beer in Africa, but also about what it can contribute.
“I think the culture in Africa is about understanding it. It is about respecting it, it is about innovating against it, and I think most importantly, it is contributing to it rather than taking from it,” says John O’Keeffe.
The company takes social responsibility seriously in Africa. Diageo has been involved in water for more than a decade. “We brought fresh water to 10 million Africans across the continent.”