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Diageo, the world’s largest premium drink producer, officially received Meta Brewery having won it in a tender for a staggering 225 million dollar offer.
Ekwunife Okoli started his career in Diageo 30 years ago as a Management trainee in Nigeria for Guinness one of the many brands of Diageo. He is now the Managing Director of Diageo Africa Regional Markets.
Ekwunife sat with Capital’s Groum Abate to explain why his company aggressively pushed for the acquisition of Meta and his company’s future plan for expansion.
Capital: What are your future plans for Meta?
Ekwunife Okoli: At Diageo we are very motivated and we brought that spirit to Ethiopia. We have quite an ambitious plan. We are determined to develop the Meta brand and grow it to win the market share from the competition and make Meta again the number one beer in Ethiopia.
Internally we want to develop the good talent at Meta. There are talented people in Meta who need more exposure in Diageo processes. We can grow and develop these talents so that they can play a role in our businesses both in Ethiopia and outside of Ethiopia.
We have great experience partnering with governments to develop their economy. We are going to cooperate with the Ethiopian government in areas of mutual interest to see how we can support them in developing the Ethiopian economy.
We want to give back to the community we work in. So we will identify where we can make a difference. One area we identified is water and we plan to drill boreholes to provide water. So these are the four areas where we have plans for Meta and Ethiopia.
Capital: Do you have expansion plans? Are you going to introduce new beer brands?
Ekwunife Okoli: Absolutely. In order to bring the business to number one, we obviously have to expand the production capacity. We will do it gradually as the brands grow. Also as we understand the consumers more and understand opportunities in the market place; we will launch new brands as well in addition to Meta. As Diageo is the number one premium drink company in the world, wherever there are opportunities we will launch other brands. But our priority now is developing Meta.
Capital: What are your plans for coping with other giants in the beer industry? The competition in the Ethiopian market is becoming stiff as some major brewers have recently entered the market?
Ekwunife Okoli: I think coping with competition is our job. We have competition in many markets in Africa and elsewhere. In many markets it is the same competition as it is in here. BGI and Heineken are our major competitors but we know ourselves well enough. We actually welcome competition as it helps us make the right decisions. We do believe we have what it takes to beat the competition. Meta is an iconic brand and Ethiopians love it. As soon as we really invest in it and help it reach its potential, people will begin to crave Meta.
Capital: Can you tell me why there is suddenly so much interest from giant brewers in the Ethiopian market?
Ekwunife Okoli: Part of our business is identifying opportunities. Ethiopia is the second most populated country in Africa. Ethiopia has also put in place a very strong democracy with a very strong disciplined leadership. We like to operate in a country where things are organized and disciplined and where people are honest. This fits with Ethiopia and we feel this is where we can invest and grow our brands. We are committed to Africa. Ethiopia is a large, influential nation and we feel we can make a difference here.
Capital: Beer consumption in Ethiopia is one of the lowest in Africa, about 4 liters per capita. Other countries have bigger consumption levels. Could this affect your ambitions?
Ekwunife Okoli: This doesn’t affect us. We do believe that as the economy grows to a point where people fulfill their basic needs like food, shelter and education; and as they get more money they will want more entertainment and recreation. And when the economy grows the beer consumption will grow. It may be one of the lowest but it is the fastest growing.
Capital: Do you have plans to open up new production lines for your spirits and non-alcoholic brands? And are you also planning to export Meta?
Ekwunife Okoli: We are still exploring the opportunities. We already have premium drinks that we import and we will continue importing. Whenever we see the opportunities for local production, we will certainly look into it.
About the export, again we have to explore the opportunities. We heard that Meta is being exported to some markets but we will have to look into it and understand the opportunities and we will plan for that. The major market currently is in Ethiopia.
Capital: Are you going to change the taste of Meta? What about the bottling?
Ekwunife Okoli: I went around the city and people we have met told us that the taste is really great. They like the natural water which Meta is made from. And you don’t change a winning formula but if we can improve it, we will improve it but not change the characteristic. About the glass I am not sure now but we will think about it in regards with what the consumers think.
We will also add Meta into Diageo’s brands where Guinness the soon to be the largest brand by value in Africa, is premiered. Guinness is brewed in around 20 countries. We also have other local brands like Serengeti in Tanzania, Tusker in Nigeria, Bell in Uganda and now Meta in Ethiopia.
Capital: Isn’t it much cheaper to build a new beer factory than buying Meta for 225 million dollars?
Ekwunife Okoli: You are right. It might be cheaper but when you are going to build a new brewery you don’t get the Meta brand. When you acquire an asset you acquire the building and the machines but the real thing you acquire is the brand, which is already loved by millions of Ethiopians. We could have built a new brewery but we will not have the Meta brand in it. When you calculate just the cost of the brand it might not match up with a new factory. Consumers don’t drink a brewery they drink a brand.
Capital: Diageo pushed aggressively for the acquisition of Meta since the Privatization and Public Enterprises Supervising Authority (PPESA) announced the bid. You did not participate in the bid for other breweries. Why did you want to have Meta this much?
Ekwunife Okoli: We were not the only ones who pushed for Meta, everybody saw Meta as a jewel. We saw the opportunity in Meta, we feel that the brand and the proximity helps the strategy we have for Ethiopia. That’s why we were focused and we were determined to have it. Now we won and have it we are very happy. And Ethiopia is the third fastest growing beer economy in Africa. Meta is also the second biggest brand in Ethiopia. Meta is the second largest brand next to St. George. The other thing I want to say is that I am very impressed by the transparency PPESA used in the bid process.
Capital: What are you going to do about helping employees obtain more skills? Will there be any layoffs?
Ekwunife Okoli: We didn’t buy the business to lay people off. We bought the business to grow. Our plan is to grow the business and maybe we will need more employees than we currently have. We also strive to see our employees are well trained and have the right skills. Our focus is growing our business, satisfying our customers, beating the competition and developing the capacity of our employees. Anywhere in the world you don’t go in to lay off people, you go to grow your business. That’s our main ambition and what we are planning to do.
However, we don’t give any guarantee as how many employees we will have. The point I am making is our plan is to grow the business and even employ more people.
Diageo is not a business of one country or the other it is a global business. During the handover ceremony I told employees of Meta that they can learn from me and work hard to climb the ladder to get to the highest post globally. Anybody can do it as long as they work hard.
One of the most important things we also do is running a good business and by doing that we are helping the economy by paying taxes. On top of that we actually charge ourselves that a certain percentage of our profit has to be spent in providing benefits to the community in which we have our business. Because we feel it is the right thing.
Capital: Currently there are a couple of breweries being set up in Ethiopia. Do you have any plans to work with these new breweries to increase you presence in the country?
Ekwunife Okoli: Our priority now is to develop Meta. But as we enter the country with ambition, after we develop with Meta brand, if there are opportunities for acquisitions that fit with our strategy and brands that fit with our portfolio, we will not refuse to look at them. We will look at them but currently our priority is to develop the acquisition we have made [Meta].
Capital: How is your business in Africa? Are you more interested in the beer business or spirits in Africa?
Ekwunife Okoli: We have a strong business in Africa. We are interested in giving what the consumer wants. You find in some countries the beer market is more developed therefore our business will be led by beer. In some countries the spirits business is more developed and our business will be led by the spirits. There’s none we are specifically attached to. In each of these segments we are very strong. In South Africa for example our business is big towards spirits. In West Africa, markets like Nigeria, Ghana, and Cameroon the bigger share of our business is in beer. Here in Ethiopia before we acquire Meta, we have a spirits business and now we will integrate the two and we will satisfy the consumer more.
Capital: How important is Africa to Diageo globally?
Ekwunife Okoli: Diageo is a global business. We have huge business in the US, Europe, Asia and others along with Africa. Currently the growth of our business is coming largely from emerging markets. Diageo’s huge proportion of growth is coming from Africa. We are the first businesses that came into Africa and we came in with a strategy to stay in. Africa is really growing now and we are witnessing that growth. Last year Diageo obtained a revenue of 1.3 billion British pounds from sales in Africa. It is the company’s largest emerging markets region. Subsequently the Diageo executive board have seen the opportunities in Africa, like Ethiopia and granted us to go ahead with investments in Africa.
Diageo’s business in Africa is divided into four regions. Nigeria is a standalone region as we have the biggest sales and revenue in Nigeria.
The next is South Africa like Nigeria. The business unit we have is in East Africa where a group of countries like Kenya, Uganda, Tanzania, Rwanda and Burundi. We have breweries in Kenya and Tanzania and export it to Rwanda and Burundi. All of the other countries in sub-Saharan Africa are the fourth unit, which we call Africa Regional Markets. Where we have big businesses will be Ethiopia, Ghana, Cameroon, Angola, Seychelles, Mozambique and many others.