Diageo Plc’s Nigerian arm will stop importing some spirits such as Johnnie Walker whiskey next year to help reduce its foreign-exchange needs and the impact of a volatile currency on its business.
(Bloomberg) — Diageo Plc’s Nigerian arm will stop importing some spirits such as Johnnie Walker whiskey next year to help reduce its foreign-exchange needs and the impact of a volatile currency on its business.
The move is part of Diageo’s plans to set up a new business to manage the importation and distribution of its spirits in West and Central Africa with Nigeria as one of its hubs, Guinness Nigeria Plc said in a stock exchange filing.
The move shows how companies are adjusting to the challenges posed by the painful steps being taken by the Nigerian government to reform the economy. The naira is the worst-performing African currency this year, slumping nearly 40% against the dollar as the country seeks to patch up its finances by scrapping fuel subsidies and revamping a widely criticized exchange-rate system.
“This strategic change reduces the company’s foreign exchange requirements and mitigates the negative impacts of lingering foreign exchange scarcity and exchange rate volatility on the financial performance,” Guinness Nigeria said in a statement.
The firm will stop shipping in brands such as Singleton whiskey and Baileys cream liqueur as well as Johnnie Walker from April next year, it said.
The company will continue to make and distribute its portfolio of non—alcoholic drinks, beer and locally produced spirits. Revenue from imported premium spirits accounted for about 6% of total sales in the financial year ended in June, Guinness Nigeria said.
The unit said in August that it was struggling to obtain dollars to pay back foreign-currency loans, despite the currency-market reforms.
The Diageo unit’s share price has declined 22% over the past year compared to a 41% gain for the All Share Index of the Nigerian Exchange.
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