When and why did Diageo decide to enter the Mozambican market?
Until July 2012, Diageo had no direct presence in the country. We have a long relationship with our distributor, CICOTI, which has a large portfolio and was giving us access and understanding of the market. I deployed in July 2012 and, by January 2013, we knew this was the right place to be. We created a company in Mozambique and by August 2013 we had bought Lusomoc Ltda, which was not performing at the time, and which we then renamed Diageo Supply Marracuene Limited (DSML). We immediately got all hands on deck to see how we could produce spirits in an affordable format to explore more opportunities in the mainstream spirits market, without compromising our values as a responsible producer of quality drinks. We started production in July 2014 through an innovative facility called The Cube, and launched two brands with three different formats. This is a plant shipped in containers, which is tested and then shipped to the destination and assembled. We offer Gilbey's Gin, in 75cl and 25cl format, as well as a premium branded spirit, Master's Choice, in 20cl format. We then started producing Smirnoff Spin in late November 2014. We run our plant with a 100% local team, which was trained to the highest global standards. We took them to South Africa for two weeks and then to Ghana for a further week, where we have a similar production unit for spirits. They are an excellent team, and are fully committed to the success of our company. They are experts in producing top-quality beverages safely and efficiently. I am glad to say we have had zero accidents at the company, of which we are duly proud.
What was the investment made here and what is the production capacity?
Currently, the investment is nearing $20 million. We employ 35 direct full-time staff with many more who are indirectly employed. In terms of capacity, we designed the plant to be able to handle the volumes we anticipate needing in the near future, and we have room to grow within this. Meanwhile, we are committed to expansion and will be introducing new brands and expanding our local portfolio, as well as securing Mozambique as a base for exports.
What demand is there for your products in Mozambique?
The growth of mainstream spirits is somehow limited by the large number of competitors out there selling in extremely small formats and at exceptionally depressed prices. We believe this to be unsustainable in terms of quality and consumer choice, as well as from a legislative perspective. Indeed, the government of Mozambique has been proactive in protecting the consumer, and there is new legislation regulating the sale, marketing, and production of alcoholic drinks. We believe the market will formalize and diminish in size; however, it will increase in terms of quality and affordable quality choices, and we want to lead that change. Our greatest challenge regarding imported spirits is the large volume of product that flows in from various origins, sometimes over borders, without correct duties being paid, whereby the products become widely and cheaply available. We are working with the authorities on this because we believe that Mozambique is losing revenue and we, as a company, are missing the potential to invest and grow further and faster in Mozambique.
How do you promote responsible drinking?
The government has been investing heavily in infrastructure, education, and health, and we are an active part of the healthcare solution by continuing to promote responsible drinking. We want to make alcohol affordable, but also to promote it in appropriately. Our Master Bartender Academy has trained over 300 bartenders across Mozambique in responsible drinking. We shared that program with the Ministry of Health, which was highly supportive, and we are constantly driving the message in all of our initiatives and training events.
What role would you like to play in the socioeconomic development of the country?
We are keen to contribute in many areas, from health and education to the sustainable economic development of Mozambique. On the health side, we have a project called Water of Life. We brought it about in partnership with the EU and several donors. Over the past few years, we have been investing considerably, having focused on supporting access to safe drinking water. We have provided access to clean water to 46,000 people in Mozambique alone, as well as sanitation for over 55,000 people. We have trained people in sustainable community efforts, such as hygiene, rubbish collection, and water drainage, among others, to over 100,000 people. We are also looking to start a graduate program to bring people directly from universities to our company, by investing in their training and ongoing development.
How do you assess the business environment in Mozambique?
There are several challenges remaining from the prior lack of economic development and an abundance of legislation, which needs to be streamlined and simplified. Yet it must be said that there is an absolute willingness to build business, both among the government and the population. People want stability, jobs, and the opportunity of a better life for their children—better education, better food, and better products and brands. We are finding a real desire from the government to receive investors and from the average Mozambican to train, work hard, and invest in their own development.
© The Business Year - January 2015