Thursday, 18 September 2014

Guinness Under Fire, As NGO Alleges De-Marketing

Guinness Nigeria Plc is currently under fire. The company which has been posting declining performances in the past five years is alleging through a Non-Governmental Organisation (NGO); Consumer Rights Advocacy Network of Nigeria (CRANN) that its poor performances are as a result of unfair practices by Nigerian Breweries.

Although, the NGO did not disclose the name of the brewery, which it claimed was engaging in demarketing and pirate marketing, it was obvious from the content of one of its adverts that it was referring to Nigerian Breweries.

In the advert material were two bottles, the bigger bottle was labelled Surulere while the smaller bottle was tagged Ogba.

With this, one does not need any clairvoyant to point at the direction of the campaign as Nigerian Breweries operates from Surulere, Lagos and Guinness from Ogba, Lagos.

Aside the CRANN campaign, the performance result Guinness declared recently also shows that the brewery is currently going through a hard period.

For its financial year ended June 30, 2014, Guinness said it recorded a 19 per cent drop in its profit after tax (PAT). The company’s audited result for the period, which it filed with the Nigerian Stock Exchange, showed that its PAT fell from N11.864 billion to N9.573 billion.

The company also said its profit before tax declined by 31 per cent to N11.682 billion from N17.009 billion the previous year, while its revenue estimated at N109.202 billion was 11 per cent lower than the N122.464 billion it posted a year earlier.

Commenting on the scenario, the company’s Managing Director, Mr. Seni Adetu, attributed the decline in revenue and profit to what he called “pricing disadvantage, growth in the value segment where the company is a relatively small player, competitor’s aggressive trade practices and increased finance costs.”

The attempt to heap blame on its main competitor for the declining performances has elicited negative media reviews.

In his back page analysis in Thisday on Tuesday titled “The Advertiser as Enemy”, Dr. Okey Ikechukwu said: “Going by the branding of the bottles in one of the sponsored adverts, it is easy to see that the small bottle branded ‘Ogba’ is referring to Guinness Nigeria Plc, as it is the only brewery in Ogba. The big bottle, branded ‘Surulere’, can be easily suspected to be referring to Nigerian Breweries Plc, which operates from Surulere. Could it be that the disappointing results recently released by Guinness Nigeria Plc is being blamed on another brewery, which is thereby being accused of ‘pirate marketing’ and ‘de-marketing’? I hope not, even for the respected image of the latter company and its brand. As another global competitor, SABMiller from South Africa, is breaking new grounds since its arrival in Nigeria, some embattled breweries may fail to buckle up but prefer to go sit long enough to also cry and roll on the ground”

Also, in an interview with Adedeji Ademigbuji of The Nation, Sesan Sobowale, Corporate Communications Director of Guinness Nigeria Plc was quoted as saying:

“We have spent billions of naira to promote and build these brands but of what use is this when a consumer gets into the bar with his friends and say give me Malta Guinness and the bar people say there is no Malta Guinness. Of what use will that be? That is really where we were hurt most. We are spending money promoting and building this brand but as a result of a deliberate action of a competitor, these brands are not available for consumers to make a choice. And so, the value of our investment has been lost. You can only get the value of our loss if you look at our advertising and promotion spends in the last five years,”

This, perhaps, according to Ademigbuyi “is the reason why industry observers believe Guinness may have hired CRANN to tactically advocate for it against what it perceived as ‘Pirate Marketing’ activities by Nigerian Breweries”.

Guinness and CRANN were further criticised for wrong use of marketing tersmn.

According to Dr. Ikechukwu, “As for the talk about ‘de-marketing’ a competitor and ‘pirate marketing’ as concepts in modern marketing, there seems to be an oblique assault on advertising lexicon. A simple empirical definition of terms tells us that Pirate Marketing is “A term describing the so-called ‘marketing strategy’ of spammers who ‘advertise’ or plug their products and services by using people’s email addresses to send out bulk mail messages to all the contacts they've hijacked, pretending the email was written by the person who's identity they have hacked into”.  Surely, this is not what the unnamed brewery is doing.

“De-Marketing on the other hand, is defined by businessdictionary.com as “Efforts aimed at discouraging (not destroying) the demand for a product which (1) a firm cannot supply in large-enough quantities, or (2) does not want to supply in a certain region where the high costs of distribution or promotion allow only a too little profit margin.” The explanation goes further to say that de-marketing strategies include higher prices, scaled-down advertising, and product redesign. So who has inflicted higher prices, product redesign and scaled-down advertising on the brewers CRANN is defending? The foregoing suggests that only a product or brand promoter can de-market itself. We may speak of its being undercut by competitors, in which case the matter should be taken up by the appropriate regulatory agency (ies)

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