NAFDAC versus Guinness: Will Guinness come out of this dispute in one piece?

The National Agency for Food and Drug Administration and Control (NAFDAC) has fined NSE-listed subsidiary of Diageo, Guinness Nigeria Plc, a sum of N1 billion for failing to comply with stated rules. NAFDAC has ordered Guinness Nigeria Plc to pay the fine “as administrative charges for various clandestine violations of NAFDAC rules” including “infractions such as the destruction activities carried out by the company without the authorisation and supervision of the agency.”

The agency has alleged that Guinness failed to secure the gates of its warehouse, leaving raw materials used in the production of beer and non-alcoholic beverages unprotected from rodents and exposed to general intrusion of other elements which ,“invariably affect the integrity of the raw materials.”

The letter referenced ENFD/7218/Vol. 1/85 and dated November 9, 2015, states:

“In view of the above, you are further required to take the following actions: disclosure of all your warehouses in the country and submission of inventory level of the stock thereof; submit a written voluntary consent of forfeiture for destruction of the expired and revalidated raw materials discovered in your warehouse; and submit a notarized undertaking to comply with all the guidelines, rules, regulations and enactments of the agency, and to refrain from any future violations.”

While the Managing Director of Guinness Nigeria, Peter Ndegwa confirmed that Guinness Nigeria received a letter from NAFDAC, he clarified that the alleged raw materials store is in fact not a production facility. Therefore Guinness will be engaging NAFDAC to resolve and clarify these issues. “[…] as a responsible corporate organization, we take these allegations which relate primarily to raw materials stored in one of our raw materials stores very seriously,” he said.

According to Ndegwa, “all products from Guinness Nigeria conform to the highest standards of quality, having not only been produced in line with the globally accepted code of good manufacturing practice (GMP), but also been repeatedly so-certified by NAFDAC and the Standards Organization of Nigeria (SON).” Ndegwa also explained how much work goes into ensuring that the final products are safe for consumption and rather comparable with similar products made by a Diageo facility anywhere else in the world.

In recent times, Guinness has been facing tough competition in the ‘bitters market’ with Nigerian Breweries (NBL) fast hijacking this space. As such, Guinness cannot afford to lose even more customer trust in the battle for Nigeria’s alcohol treasure. Therefore the company is tasked with not only assuring its Nigerian consumers of the quality of its products, but also standing tall in a battle which extends beyond the confines of alcohol.

Ace Roots, which is simply the Nigerian Breweries’ reply to Orijin, already played the second mover advantage card to perfection by identifying and exploiting the flaws inherent in Guinness’s Orijin. The NBL drink also countered Orijin on healthiness; showcasing what it considered a healthier alternative as it contains only a single cube, compared to Orijin’s five. It is now the first low sugar bitters made in Nigeria.

NBL currently controls more than 70 percent of Nigeria’s $2.4 billion alcohol market, which is growing at an annual average rate of 6 percent. The company hit this mark after it bought over Consolidated Breweries last year. Guinness, however, holds a lucrative niche. Its renowned black beer brand, Guinness Stout, remains the overwhelming favorite of local consumers, while it also controls the distilled beverage (liquor) market thanks to its parent company Diageo, the world’s biggest liquor maker.

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