Diageo eyes Africa exit in strategic shift as EABL’s future under review 

KENYA – Diageo Plc is reportedly exploring the sale of its remaining African operations, including EABL, as part of a broader shift towards an “asset-light” strategy.  

The move is aimed at streamlining operations, reducing exposure to economic volatility, and addressing declining alcohol demand and investor concerns. 

According to a report by Business Daily, the strategy follows years of divestment in Africa, including the sale of Guinness Ghana Breweries, Guinness Nigeria, Guinness Cameroon, and Meta Abo Brewery in Ethiopia.  

While Diageo has exited these markets operationally, it continues to license key brands such as Guinness to local manufacturers and distributors. 

Diageo’s Chief Financial Officer, Nik Jhangiani, stated during the company’s third-quarter earnings call that the restructuring will involve “substantial” changes, going beyond the typical disposal of underperforming or niche brands.  

The company has also announced a US$500 million cost-saving initiative as part of the shift. 

EABL remains one of Diageo’s most profitable African ventures, contributing approximately 65 percent of the group’s regional revenue. Based in Nairobi, EABL commands strong market positions in Kenya, Uganda, and Tanzania.  

However, challenges such as currency devaluation, increased interest rates, and rising tax pressures have weighed on its recent performance. Shares in EABL have declined by 24 percent over the past year. 

While Diageo has not confirmed any plans to divest EABL, analysts from Bernstein and Jefferies have identified the company as a potential candidate for sale, particularly in light of Kenya’s volatile exchange rate and regulatory burden on alcohol producers. 

EABL’s significance to Kenya’s economy is substantial, contributing to employment, tax revenue, and foreign investment. Any potential exit by Diageo could have wide-reaching consequences, including job losses at production plants and farms, as well as investor unease on the Nairobi Securities Exchange where EABL is a key counter. 

Despite the uncertainty, EABL has recently shown signs of recovery. In its half-year financial results, the company posted a 19.6 percent rise in profit after tax to Kes 8.1 billion.  

This rebound was driven by currency stability, lower interest rates, and disciplined cost management. Net sales increased by 2.1 percent to Kes 67.9 billion, supported by strategic pricing and product innovation.  

Finance costs dropped 14.4 percent, aided by foreign exchange gains and reduced debt. 

Regionally, Kenya accounted for over 60 percent of total revenues, with a nine percent sales increase. Tanzania and Uganda also performed well, posting sales growth of 16 percent and three percent respectively. 

The potential divestiture of EABL would mark a pivotal shift in Diageo’s presence in Africa and could reshape the region’s alcoholic beverage industry. 

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