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Nigerians woke up to the news that Diaego, the parent company of Guinness Nigeria, has sold 58% of its shareholding to a company known as the Tolaram Group for the sum of 103 billion nairas ($70 million).
Tolaram already owns several popular Nigerian consumer products, including Indomie, Lush Hair extensions, Minimee, Dano Milk, Lekki Port, Hypo, Kelloggs, Colgate Mimie noodles, and Power Oil.
The announcement comes at a challenging time for Guinness Nigeria. The company recently reported a loss after tax of N61.7 billion for the nine months ending March 31, 2024, a stark contrast to the N5.9 billion profit in the same period the previous year.
Despite a 28% year-on-year revenue growth to N220.3 billion, significant foreign exchange losses totaling N83 billion and a pre-tax loss of N60.5 billion have severely impacted the company’s financial health.
The financial strain has wiped out Guinness Nigeria’s retained earnings, pushing the company into a negative equity position of N4.7 billion.
The interest expenses on loans and borrowings surged by 490% year-on-year to N5.6 billion, compounding the fiscal challenges. Despite these setbacks, Guinness Nigeria remains optimistic about its future.
Diageo will still retain the brand name Guinness, and so the new owners, Tolaram, will pay a licensing fee every year to Diageo to be able to use the name Guinness for business and commercial purposes in Nigeria.
Who is the Tolaram Group, which invested 103 billion naira to acquire the Guinness Nigeria legacy business?
After giving Nigerians the gift of fast noodles known as Indomie today, the Aswani family, the family behind the Tolaram group (the makers of Indomie), is betting on Nigeria’s future and its economy by building what is known as the Lekkias, the Lekki deep sea port.
Let me digress.
Mohan Vaswani, the father of the current Chairman of the Tolaram Group, who started selling textiles in 1948 from a shop the size of a shipping container in a small town in Indonesia, once told his son, “One day you will operate across the world.”
Now 80 years old and in charge of Tolaram Group, a Singapore-based business with an estimated annual revenue of US$1.8 billion, his son Vaswani is fulfilling the family patriarch’s prophecy.
Tolaram is building a port in Nigeria, which I will discuss below; producing paper in Estonia; running a bank in Indonesia; and supplying power in India. It has food production and distribution operations across Africa and sells to more than 75 countries. Now, the company is expanding into digital services and plans to add a hedge fund to its wealth operations.
The international expansion was possible because the family hit a goldmine in Nigeria by introducing and selling indomie.
Let me explain:
In the 1960s, the Aswani people arrived in Nigeria in search of greener pastures.
They tried so many businesses that failed, from textile manufacturing to trading commodities, before they finally hit gold with Indomie noodles in the late 80’s.
Indomie was at first a flop because Nigerians at that time were not used to the fast food culture and they did not understand what it was.
My 65-year-old dad does not eat Indomie till today even though Indomie was introduced into Nigerian food culture when he was my age he was not convinced why he should discard the traditional foods available at that time for what his generation saw as a strange food.
My parents’ generation believed that the Aswanis were trying to force them to eat worms.
This was the mindset prevalent at that time, but the Aswanis did not give up.
Growth came slowly—it took 13 years for revenues to reach $10 million in Nigeria—before sales began doubling annually by the mid-2000s because of the reforms introduced by the Obasanjo government.
The Aswani family remained resilient and preserved throughout their journey, and now they have struck gold by simply selling Indomie.
Aswani’s has turned Indomie noodles into one of Nigeria’s national dishes and Tolaram into the largest food company in Africa’s biggest market, surpassing the likes of Unilever and Nestlé, as Indomie is now in every corner market stall across Nigeria and most kitchen cupboards—a cheap, stomach-filling staple that is so ubiquitous it features in rap lyrics.
Aside from Aswani’s resilience and perseverance, it took consistent advertising that targets mothers, kids, and the young, as well as hacking distribution by making Indomie available in every corner of the country, for Aswani to hit gold with Indomie.
This breakthrough in Nigeria with Indomie changed the family business story forever and also enabled the family business to transform into an international multinational business with a global footprint.
Aswani has businesses in 20 countries, with over 16,000 employees worldwide.
To reflect the family’s global ambitions and aspirations, the Tolaram Group, the parent company of Indomie, moved its headquarters from Lagos to Singapore.
At the moment, the Aswanis are making $1 billion (1.4 trillion naira) every year from just selling Indomie in Nigeria.
Additionally, they earn over $500 million by selling Indomie in other African markets as well as international markets like the US and UK, where Africans living abroad consume it.
They have achieved commercial success with Indomie in Nigeria which they achieved after displacing the likes of Nestle, Cadbury, and Unilever in the market by taking the battle to the doorsteps of these established multinational companies.
Aswani’s got another dream.
They are taking a bet on Nigeria’s long-term economic future by building a deep-sea Lekki port in Lagos.
It was easy for them to make the decision.
Apapa Port is currently experiencing severe congestion, making it a challenging situation.
The whole thing is made worse the Nigerian government is broke and cannot build another port.
Just like Daniel came to justice, the family decided to save Nigeria from economic woes and stagnation.
The planning for the Lekki deep sea port started 10 years ago, and approval for it was given by Jonathan’s government before they left, but construction for the project just started last year.
The Lekki deep sea project, located at the Ibeju Lekki axis at the moment, is 79% complete and is expected to start operations this year when completed.
The state-owned China Harbour Engineering Company, which will build the new port and holds a 52.5 percent stake, is contributing $470 million in equity and $630 million from the China Development Bank.
Tolaram (the Aswani family, who are the project’s drivers and initiators) owns 22.5 percent, the Nigerian Ports Authority owns 5 percent, and Lagos State owns 20 percent.
Currently, ships have to wait between 25 and 30 days just to get a berth at ports such as Tin Can and Apapa. The completion of the Lekki deep-sea port will eliminate these delays.
The project, when completed, will be four times bigger than Apapa Port. It will also help to decongest Apapa and take vessels away from Cotonou’s port.
Going forward, the new Lekki port will also create over 200,000 jobs, both formal and informal, for young people in Lagos, expand Nigeria’s GDP, and be a game changer for Nigeria’s economy.
It is also important to note that the new Lekki seaport is a private-public partnership between the private investors led by the Aswani family and the Nigerian government, so the Aswani and their Chinese partners are expected to build, manage, and operate the Lekki seaport for 35 years before handing it over to the Nigerian government.
The 35-year lease on the Lekki deep sea port is to enable the Aswanis and their Chinese partners to recover and recoup the money spent on building the Lekki port and make a profit too before handing it over to the Nigerian government.
This makes me wonder why Nigerian businessmen sat back and watched a Pakistani (the Aswani) and Chinese company buy up a 35-year concession to build and manage what will be a very lucrative Lekki port.
But beyond this, the Aswanis are showing us how it is done, one Lekki sea port at a time.
At a time when Nigerian pastors are borrowing 4.5 billion nairas from consortiums of banks to build mega-churches and cathedrals where unemployed young Nigerians will go to pray for jobs, the Aswani is reminding us again that religion has made us poorer, and for us to grow as a people and country, we need large businesses that can create jobs for our unemployed young people, and we also need bold businessmen and women who are ready to take a bet and risk on the future of Africa’s most populous economy.
This is exactly what the Aswanis have been doing since they arrived in Nigeria from their native Pakistan and are still doing.
I think they deserve all the applause and our eternal gratitude.
Chukwudi Iwuchukwu
drbiggie 