S AFRICA: Diageo "actively engaged" in talks over new alcohol legislation

By | 6 July 2012

Nick Blazquez is hoping the South African government will develop the "right sort of policy"

Nick Blazquez is hoping the South African government will develop the "right sort of policy"

Diageo's president for Africa has admitted the company is "actively engaged" in dialogue with the South African government over proposed new alcohol legislation that includes a ban on advertising products.

On an investor conference call earlier this week, Nick Blazquez said that there is "ongoing dialogue" over the controversial plans, which also include a proposal to raise the legal drinking age from 18 to 21. The measures are currently being considered by the South African authorities, but are facing fierce opposition from the industry

"In South Africa, there is an ongoing dialogue. We’re actively engaged in that," said Blazquez. "We’ll support the government in hopefully developing the right sort of policy." 

Blazquez acknowledged that the company is "operating in a controversial sector". But, he added: "We’ve got a good reputation upon which to build and try to help governments establish the policies and have the outcomes that they would like to have." 

Turning to the rest of Africa, the Diageo regional president said it was "very interesting" that in Kenya the duties on spirits and beer were frozen in the country's budget last month. "I think that’s in recognition that if you put increased duties on spirits and beer, that can drive more people into the informal sector," said Blazquez. 

"The challenge with that is, firstly, the total government revenue declines and, secondly, the adverse impact of people drinking this unregulated product is really quite significant." 

Blazquez said Diageo was "joined at the hip" to Heineken and SABMiller, the region's other big players, in promoting responsbile drinking.

Earlier, he said the opportunity for continued growth in African markets remains "significant", based on the per capita consumption of beer. In the spirits category, Blazquez suggested he did not fear competition from rival companies and even encouraged it.  

"I think there’s going to be significant growth opportunities for all," he said. "Some of our main competitors have publicly stated they’re significantly increasing their investment in Africa because they see some significant growth numbers being delivered. 

"I kind of welcome that because, if they’re going to be investing in their premium spirits brands, it’s going to help us build the category and I think that’s a good thing."

Earlier this year, in an extended interview with just-drinks, Blazquez said he believed Diageo's Guinness brand will be the number one beer in value terms across Africa within the next two years

Expert analysis

Alcoholic Drinks in South Africa

Alcoholic Drinks in South Africa industry profile provides top-line qualitative and quantitative summary information including: market share, market size (value and volume 2007-11, and forecast to 2016). The profile also contains descriptions of the leading players including key financial metrics and analysis of competitive pressures within the market. Essential resource for top-line data and analysis covering the South Africa alcoholic drinks market. Includes market size and segmentation data, textual and graphical analysis of market growth trends, leading companies and macroeconomic information.

Sectors: Beer & cider, Emerging markets – BRIC, Spirits

Companies: Diageo, Heineken, SABMiller, Guinness

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