The African spirits market is poised for significant growth, with forecasts from GlobalData projecting a surge in value from its 2016 low of $10 billion to an impressive $16.6 billion by 2027. This transformation marks a remarkable turnaround for the industry, which had remained stagnant since 2008, barring a brief dip to $9.7 billion in 2020 due to the pandemic.
In a bold move this week, global beverage giant Diageo unveiled plans to establish a wholly-owned spirits-focused business in West and Central Africa. This strategic shift follows Diageo’s partnership with Guinness Nigeria since 2016, where their spirits have been distributed. Remarkably, 6% of Guinness Nigeria’s revenue in the financial year ending June 30, 2023, was attributed to imported Diageo spirit products.
While Diageo reported a 44% decrease in operating profits for its African business, dropping to £176 million from the previous year’s £315 million, the company’s spirits division posted an impressive 8% growth in net sales. Notably, Johnnie Walker gained popularity, driving this surge, while beer net sales also increased by 3%. Diageo has set its sights on Africa with a clear strategy: “to grow our beers fast and our spirits faster.”
David Harris, the research director for alcoholic beverages at GlobalData, expressed his insights on Diageo’s bold move, stating, “[Diageo] will be counting on growing moves towards spirits amongst younger African drinking-age consumers, who are increasingly seeking domestically-produced products that resonate with them, rather than imported Western brands.” He went on to emphasize, “Their strategy seems to be going all in on Africa, essentially treating their operations in the region like a separate business sequestered from Diageo, while still wholly owned as a subsidiary.”
These developments signal not only a promising future for the African spirits market but also Diageo’s commitment to capturing the hearts and palates of African consumers with a range of locally-relevant, high-quality spirit products. Africa’s spirits landscape is undoubtedly on the verge of a remarkable transformation, driven by changing consumer preferences and the strategic vision of industry leaders like Diageo.