The Wehring Interview - Diageo Africa president, Nick Blazquez - Part II
Following on from part one of my interview with Diageo's Africa president, Nick Blazquez, which ran last week, this week we give you the second part, in which Blazquez gives us an idea of Diageo's future plans for the region.
For all Blazquez's talk of Africa's potential, the continent does not garner the kind of headline coverage that Asia has done. The reasons for this, according to Blazquez, are more because of outsiders' perceptions than the reality.
“I think that the brand of Africa is somewhat tarnished and the view of Africa is somewhat unbalanced,” he says. “When people think of Africa, they think of poverty, war, famine, disease, corruption. And, you know what? That stuff exists. It actually exists everywhere, but that's a lot of what people talk about when they talk about Africa. They don't tend to talk about all the huge growth opportunities. So, it's not so much on the radar as China, India or Brazil, because of that image.”
One other reason for the region's absence from the radar is the up-hill task of collating data. “Africa is data sparse, relative to other markets around the world,” Blazquez continues. “But, that's changing very rapidly; there have been a number of people publishing more detailed reports on Africa and people are recognising that it's happening.
“I suspect that the light will increasingly be shone on Africa. We're already seeing it, with consumer goods companies piling in to invest for growth. In a world where you're seeing the more developed economies slow down, more people will go to Africa - thi'll put more data into the system. Africa will be seen equally attractive as India or China.”
Nick Blazquez, president of Africa for Diageo
For Diageo, Africa is more about beer than spirits, so the company has a different set of competitors here than in the rest of the world. “While spirits account for around 75% of Diageo's business globally,” Blazquez notes, “beer accounts for 75% of our business in Africa. Therefore, we compete far more directly head-to-head with the SABMillers and Heinekens of this world.” In spirits, while Diageo does battle with Pernod Ricard in South Africa, it is local firm Distel that also provides meaningful competition in the country. “Across the whole of Africa,” says Blazquez, “we've got 45% of the total spirits market - half of that is in South Africa. Distel has got 37% spirits share, with 90% of their business coming from South Africa.”
Diageo's presence in SA comes in the form of Brandhouse Beverages, a JV with Heineken and Namibia Breweries. Three years ago, Diageo and Heineken set about building what was – and still is – the first brewery for both companies in the country. “Our strategy is fairly simple,” says Blazquez. “The top ten markets in Africa account for about 80% of the profit pool. For us to realise our full possibilities from the continent, we'd like to participate directly in all of these profit pools, with our own in-market companies, doing our own thing, leveraging beer and spirits together. In South Africa, we had a strong spirits business. The country also accounts for around 35% of the profit pool in beer for Africa. We wanted direct access to that profit pool.”
With South Africa's beer market dominated by SABMiller, though, DIageo preferred to team up with another scale player rather than go it alone. “It's far better to partner with somebody like a Heineken or a Namibia Breweries, and get direct access to the profit pool through that,” Blazquez notes.
“Secondly, beer and spirits together is a winning combination in Africa: it allows you greater consumer and customer insights, you can put both on the same trucks to make the same calls. When the Amstel brand was transferred (in 2007), we saw a big step-change in Brandhouse's share. So, we put in around 300 more salespeople, carrying beer and spirits. Subsequently, our spirits share has really accelerated. That's all down to fully utilising the route-to-market that we've established.”
Such a success could see the JV model replicated in other African markets, then, surely. “Each market is different,” Blazquez counters. “Do we really need it in Kenya, where we have over 90% market share, or, in Nigeria, where we've got about 40% value share? I'm not sure what additional value Heineken would bring to our businesses there.
“I don't think we'll see Heineken and Diageo coming together further in the continent. The cultural fit's great, but we're both enjoying good growth.”
Going forward, then, which markets can we expect to see Diageo focus on on the continent? “Angola and DRC (Democratic Republic of Congo),” Blazquez snaps straight back. “Angola is huge; the economy has grown eight-fold since 2002. Luanda is like downtown New York! It's a big spirits profit pool, and it'll grow rapidly: Loads of natural resources, with infrastructure being laid down. I'd like to be participating there directly.”
Blazquez has yet to make up his mind how he will fix the two markets. “We could go directly in there with spirits, and import,” he mulls. “We could build a greenfield, or we could acquire something that's available. One of the advantages that we've got in Angola is that Scotch is so well appreciated there. We can build off that strength. I suspect that, whatever we do will be spirits-led in the first instance.”
During our time together, I've been struck at how strong a handle Blazquez has on Diageo's numbers – there's been no “I'll get back to you with those” moments during the hour. He used to be an accountant, I figure.
“No, I was a university professor,” he corrects. “I used to teach vets and medics at Bristol University. I'm a scientist, with a PHD in physiology.”
I ask if he'll take a look at a strange growth on my leg. He politely declines. “I left when I was about 30,” he says. “I've been with Diageo for the last 23 years.”
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