Diageo to sell Guinness Cameroon to Castel Group for £389 million

Diageo has agreed to sell its Guinness Cameroon business to Castel Group for £389 million in a deal to accelerate Guinness’ growth and “provide the best outcome for the brand”.

The agreement follows a significant review of options for Guinness in Cameroon – with the drinks giant admitting it had reached its capacity at its brewery in Douala. Speaking exclusively to db, a Diageo spokesperson revealed that “in terms of growth – we believe this partnership with Castel gives Guinness in Cameroon an accelerated platform for growth we could not deliver by a brewery build” and added “we reviewed all strategic options”.

When asked about the deal and why the company might offload such a well-performing arm of its operations in a thriving market, db was told: “This is an individual market decision – based on the fact we have a single site brewing operation in Cameroon – at capacity – it does not mark any change in overall strategy. It is merely a reflection of our agile beer model.”

The spokesperson said, that Diageo identified that “giving the production and distribution to the biggest brewer in the country is the way to accelerate Guinness’ growth” and admitted that with Castel having the dominant position in that market, it would give the brand an advantage.

“Building a new brewery and filling it takes time. Initially it would have to be filled not just with Guinness but another value beer to fill volume capacity. We would also not address the national distribution which is hard to crack as a smaller player in the market with a single beer offering and Castel having the dominant position and route to market. Partnering with them provides the best outcome for the brand,” the spokesperson told db, adding that Diageo’s plan has always been to invest behind the most efficient path to growing the brand.

“This means that where we are subscale (in capacity or distribution) we partner with the local leader under licence, where we can have scale we produce and distribute ourselves. This explains market differences within our Africa portfolio. This sale is about a brewery – not the Guinness brand. The Guinness brand is hugely successful across Africa (up 19% across Africa in H1 F22) where it continues to grow – its growth in Cameroon – prompted the review of options for expansion which led to this decision,” said the spokesperson, reassuring: “Guinness in Cameroon will stay strongly tied to the Diageo Global Brand Team in Dublin which will continue to direct strategy and marketing approach and campaigns” and “two dedicated Guinness Brand team marketeers will work with Castel in Cameroon permanently to ensure alignment with the global brand”.

Dayalan Nayager, president of Diageo Africa added: “Under this new agreement, the brand will have both expanded brewing capacity and distribution. It will remain part of the global Guinness family through direct marketing oversight,”

The sale, which “has been agreed but not completed,” is still “subject to local approvals”.