Aare Fatai Odesile, Managing Director/Chief Executive, Grand Oak Limited, in this interview with Daniel Adeleye, speaks on the challenges of the spirit and wine manufacturing companies in Nigeria, amongst other related issues. Excerpts:
Menace of product counterfeiting
Counterfeiting is as old as human existence itself. And one of what we can call security items in the world is how people fake it. And what we look at is marketing opportunity because for people to attempt to imitate you, it means you are successful. We see that as a success prize that man has to pay. Therefore we take serious steps to tell consumers through packaging education. We have some clear identified signals. Take Seaman Schnapps as example, we have some holograms and massive cross examinations by way of poster, radio, television for people to identify the original one. Because if you look at distilleries industries, it’s more challenged as far as we’re concern, given the nature of the industry itself. And what do I mean, if you take a bottle of coke or a bottle of beer, you’ll need to return it as a retailer. You need to take your empty bottles to buy the new one. But in distilleries, it’s a single trade bottle, which means that if you buy Schnapps for instance, you take it to your house, you drink it and because of our people’s habits to throw things in the garbage, and some people are now specialised in picking those used bottles, recycling and sell to those who fake it. And because it’s alcohol, it’s stable, but it’s still not the right thing. So we do a lot of consumers’ education for people to identify the danger of consuming all those fake products. We’ve been taking steps to let people know how to identify the originals. There are people genuinely buying fake and they don’t know. To those categories, we have tried as much as possible to educate and use distribution, to ensure availability and communicate very well. And those who also know it is fake and they buy it and why because they probably want to use it as gifts, to those who may not know the difference. For those who are buying unknowingly, we are doing everything to educate them in collaboration with the Consumer Protection Council (CPC), National Agency for Food and Drug Administration and Control (NAFDAC) and the Standard Organisation of Nigeria (SON). There are lots of collaborative efforts to safeguard our consumers from taking fake products unknowingly.
Experience with the Nigerian market
There are some categories of Nigerians, who are just genuine consumers, and therefore without knowing it, they go into it and they buy it. But there are some groups, deliberately buying even when they know it’s fake. My own experience with Nigerians is very simple, if you are able to convince a typical Nigerian about the danger, particularly what is going inside his system, average Nigerians still care about their health to a large extent. So my experience about this market is that typically, 70/80 percent of Nigerians do care about what goes into their mouth and if well convinced, they are willing to dump things that are likely to harm them.
Yes, you are right, Nigeria Distilleries Limited is one of the pioneer distilleries company in Nigeria. And this company has been in production and sales of wine for so many years. Some of us grew up to know about Seaman Schnapps. One of the successes of Nigeria and Grand Oak Limited is consistency of quality. In spite of all the economic challenges, we have stayed through the qualities of these brands. We have also been in a brand company, brand development, brand marketing, consumer focus and so on. For instance, if you look at schnapps market, Grand Oak Limited was the first to introduce a third class of the schnapps. Prior to that initiative in 1999/2000, when you want to do your cultural prayers, you want to pour libation; it was customary at that time to look for any available glass. It was initiative of Grand Oak Limited, Nigeria Distilleries we introduced a brand called Schnapps 2000. That Schnapps 2000 was done at the approach of 21st century. Since then, everybody keyed into that. We pioneered schnapps one litre. When you take a bottle of schnapps and pray into that bottle, everybody wants to take from it, and the former bottle posed a limitation. So that is what led to the birth of Schnapps one litre pack which is very successful. If you look around, we are the first person to introduce bottles made of polyethylene terephthalate (PET), a lot of people are also using glass bottle 20cl. Some years ago we look at what the direction is and most of our brands like Regal 12cl, Dark Sailor, all went to PET and everybody followed us today. Even the sachet is also our initiative; we know that a lot of consumers desired the taste of good thing. They want the quality schnapps, they want the Lords gin, but the purchasing power was not there. So they are only to pay for a level, so when positioning the quality of the brand and equity of the brand, we also introduced a top quality sachet that’s consistent with the brand now affordable to the majority of Nigerians. So innovation is one of our key strength and we are also consumer-centric. We are doing quite a number of things based on consumer insight and of course, on the level of quality irrespective of the challenges in the environment. So I could attribute our success to all that and ultimately, our people. Because machine cannot operate itself, you need people to drive the brand and to drive the quality. This is a family environment where everybody sees themselves as a member of family unit. And we all work towards the consumers’ expectations.
Using media to revive ailing business
Bacchus tonic wine is still a formidable force in the market. I can simply say that in a tonic wine category today, it’s still the only brand. I mean we have some other brands come and go and don’t forget that consumers fashion trend also changes. With the advent of red wine which was not there before, it does give some challenge to the blend red wine which Bacchus is. But I can tell you that there are some layers of consumers that still enjoy the vitamins and nourishment of Bacchus tonic wine. And it’s still doing credibly well; it’s one of the brands that have survived decades. It’s still one of our targeted marketing, because of our positioning at wedding trains. If you attend marriage in the Registry today, you’ll see Bacchus there. It’s part of the requirements for those who want to get married in the court today. So we leave it there to keep on satisfying that market. Notwithstanding the emergence of red wine culture in Nigeria we still do not want to disappoint those who enjoy the vitamins, the tonic properties and the nourishment of Bacchus. So it’s still there and what we now do is a lot of experiential activities that meet the consumers at the point of their needs.
Game plan for the future
We remain focus on drinks, and like I was talking about red wine, as long as it’s drinks that would be our focus. It could be alcoholic and non-alcoholic. But we want to be playing in drinks market substantially. We have more than enough segments to remain on these different strata within drink business.
It’s challenging because the bulk of our materials on alcohol are still imported. There are still some imported companies that run in this economy, they know what effort has been made but then they know there is no alternative returning. Knowing that forex is still high, although there seems to be stability today unlike when the rate was fluctuating. Of course, that has also given rise to salary agitation by staff, because everything has gone up, your staff spend more as such they have to fall back at you. And unfortunately, at the end of the day, the consumers out there will not be able to buy at that price. So while there are pressures internally, there is limitation externally affected by the purchasing power of consumers. But we are remaining truthful to our words; we will not compromise in all aspects. Well margins are becoming very slim, and that is one major impact on business because we don’t want to compromise on our quality. But as long as the business is going and the consumers are happy, we’ll remain in this business.
Battling economic crunch
Well that is a perception. But if it is true at all, it would be mainly among the low earned products. Because those who have no money, yes they still want to get high, and some of them do find solace in all this regional local brands. There’s a lot of movement towards fraternising where instead of going to buy a bottle of beer, and before you can satisfy yourself you have to take like three bottles, but you can come together and buy a bottle of Lords dry gin for instance and by the time they finish it, they are already high. So there is this convergence among friends who go out and have fun. So that movement is happening. However, that’s not to eliminate the low-earned of the market. So to some extent, yes, but then it depends on your target and the kind of people you go after, and the reason for consumption.
Toughest business decision
One of the toughest business decisions is convincing my colleagues on the board that we have to remain true to our vision and mission, which is to offer quality brands at a good money proposition to the consumers. And that has led to some decisions that I look inward and discontinue some imported input materials. It was a tough call because you also need to carry out a lot of extensive research to be sure that what the locals are offering will not compromise your brands or will not let consumers down. It was a tough call because some of those materials were imported but to come back and be using locally-sourced materials was a decision that we have to take collectively early 2016. It posed a lot of challenges because only the quality differences are there but kudos to the local industries because they’re also rapidly mopping up and improving on their ability and also business suffered a lot of contractions in 2016. Nigeria was in recession and the turnover crashed and of course some jobs, because of the luxurious ways of our lives, when things are going on well, there are so many jobs that could outsource, but because things are rosy they find their way. So we have to do a review of what are priority jobs, and what are the jobs that could be outsourced. And that was also a very tough call. But outside of that, I think we are getting back.
Yes, there is laid down disciplinarian procedures. There is what we called, Employee Handbook. At the resumption you are taken through the handbook to familiar with dos and don’ts of the company and the punishment attracted if you do the don’ts. Don’t forget we are also a unionised company, one of those very few companies in Nigeria that is fully subscribed to union both at the national union and that. We are always engaging with the union, so they know what we are doing. They know the rules and they know when you go against the rules, the handbook has already signed all of that. So it could be a warning letter, it could be suspension. But to be honest, we have few of those cases, because there are forum periodically where staff are collectively gather together and we discuss. Every member of staff is free to ask the Managing Director whatever you think you need to know and there is no consequence for that. There are few of that but administrative procedures take care of that.