Guinness Nigeria has forecast five percent decline for the country’s gross domestic product in 2021 as the company projects inflation will remain at double digits.
The brewer stated that the recovery of the economy is still unclear as covid-19 infection rates and deaths continue to rise – currently, there are 190,983 plus reported cases and 2,361 deaths.
Guinness Nigeria’s economic projection comes amid a 5.01 percent growth in GDP of the country’s second quarter 2021, and drop in inflation rate to 17.38 percent in July.
In its First-Half financials filed with the Nigerian Exchange Group on Friday, August 27, Guinness Nigeria reported the inflation rate at about 13 percent.
In the its words,; “The Company considered 3 scenarios; Optimistic, Base and Pessimistic. Each scenario looked at various levels of recoverability in the market as a result of COVID, forecasted inflation & GDP and possibility of price increase.
“Probability of the Optimistic happening is based on how quick the economy picks up and recovers as a result of COVID-19. The recovery still remains unclear as infection rates and deaths continue to rise. We assumed GDP rate of about (-5%) and inflation at about 13%.”
Trademark and technology licences
Meanwhile, during H1 2021, Guinness Nigeria paid trademark fee and technology licenses of N918 million to Diageo plc, which gave the local firm exclusive rights to the know-how, manufacturing, distribution and marketing of its international brands such as Guinness brands, Orijin, Smirnoff Snapp, amongst many others.
The payment represents a royalty of 0.5 percent of net sales value and a technical service fee of 2 percent of net sales value, and its higher than the N566 million paid in 2020.
Note that Diageo is the majority shareholder of Guinness Nigeria through its other subsidiaries, Guinness Overseas Limited and Atalantaf Limited.
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