Diageo’s Nigerian arm to stop importing Johnnie Walker amid shortage of foreign exchange

Nigeria | Diageo’s Nigerian arm will stop importing some spirits such as Johnnie Walker whiskey next year to help reduce its foreign-exchange needs and the impact of a volatile currency on its business.

The move, announced on 6 October, shows how companies are adjusting to the challenges posed by the painful steps being taken by the Nigerian government to reform the economy.

The naira is the worst-performing African currency this year. It has slumped nearly 40 percent against the dollar, Bloomberg reported, as the country seeks to patch up its finances by scrapping fuel subsidies and revamping a widely criticised exchange-rate system.

Guinness Nigeria plunges into red

By carving out the import business, Diageo hopes to spruce up its local business’ financial performance. Diageo will create a new spirits-focused division, with Nigeria as one of its hubs.

In the year ending 30 June 2023, Guinness Nigeria’s revenue from Diageo’s international premium spirits reached NGN 14 billion (USD 18.4 million), representing approximately 6 percent of the Nigerian arm’s total sales. Guinness Nigeria also declared a loss of NGN 18.2 billion for 2023, compared to a NGN 15.7 billion profit in the previous year, after its finance costs soared on the currency devaluation.

Share price swoons

The unit said in August that it was struggling to obtain dollars to pay back foreign currency loans. Guinness Nigeria, which is listed on the Nigerian stock exchange, saw its share price decline 22 percent over the past year, compared to a 41 percent gain for the All Share Index of the Nigerian Exchange.

Guinness Nigeria will continue to distribute locally produced spirits, as well as non-alcoholic drinks, beer, and RTDs (ready-to-drink).

With a stake of 58 percent, Diageo is a key shareholder of Guinness Nigeria. Diageo stressed that it does not plan any changes to its shareholding.