Ghana, even before and during the Gold Coast period had a long-standing history with alcoholic beverages. Locally brewed alcoholic drinks were part and parcel of daily lives. Apart from its daily consumption, it also has spiritual significance. Even to date, alcohol is still regarded as a link between the physical and spiritual worlds. It is safe to say it is an indispensable part of life used both in times of merry and times of sorrow. From naming ceremonies, entertaining visitors, weddings, and chieftaincy functions, to funerals alcohol is a prominent feature.
Prior to colonization, the locally distilled liquor from the palm tree was commonly used even in other West African societies. It came to be called akpeteshie during the colonial era after it was banned by the colonial administration. The colonial administration, realizing the strong competition the local gin was posing to their imported exotic ones decided to ban it.
Locals, after the ban had to hide and brew or hide and drink hence earning the name akpeteshie which is a Ga language translated as “hideout.” Others called it “bome kutuku” which means box me to reflect the beating sounds when arrested by the colonial police. This reflects how the colonial administration attempted to suppress the local gin to pave the way for European ones.
Gold Coast and West Africa were a major market for European alcoholic beverages even during the slave trade era hence earning the name the triangular trade. After the slave trade ended, West Africa continued to be an export destination of European gins especially from Germany and the Netherlands hitting millions of gallons at the time of World War 1 in 1914.
Ghana has an interesting history with the Netherlands when it comes to the trade in gins. Do you know that when Henkes Distillery moved its factory from the Rotterdam port to an industrial estate in 1968, it was Ghana’s then-ambassador to the Netherlands, Dr. De Graft Johnson who officially opened the new distillery? The history says the ambassador’s secretary at the event, clad in the traditional Ghanaian kente poured libation with “Henkes Star Brand Prize-Medal Aromatic Schiedam Schnapps.”
GIHOC Distelleries – The Link
Considering Ghana’s high taste for alcoholic beverages and their significance in the cultural settings among the people, the pre-independence administration under the pre-independence Industrial Development Corporation (IDC) began the construction of the State Distillery Corporation. Ghana’s first president, Dr. Kwame Nkrumah, one year after independence opened the distillery in 1958 aimed at aimed at weaning the country off its dependence on exotic or foreign gins.
The State Distellery Corporation is not only regarded as the first brewery in Ghana but it is touted as the first also in West Africa. A decade after the establishment of the State Distilleries Corporation, the Ghana Industrial Holding Corporation (GIHOC) was established in 1968. In 1993, the brewery became a division of GIHOC hence becoming GIHOC Distilleries.
Since its inception, the company’s core operations have been the distillation, refining, blending, and manufacturing of various alcoholic beverages. Although it still remains one of the very few legacies still standing from the time of independence, its operations have been at optimum.
Despite the operational challenges of the company, GIHOC over the years has mastered the production of what many regard as quality brands. Let’s take a look at a few of them;
Castle Bridge
Castle Bridge London Dry Gin is a premium juniper-flavored alcoholic beverage, crafted through a complete distillation of juniper berries, botanicals, and plants. Known for its distinct quality, it is widely patronized in West Africa. With a 40% alcohol content, it can be enjoyed straight or mixed in cocktails, making it a versatile choice for various occasions. Its refined taste and aroma have established it as one of the top-quality gins in the region.
Herb Afrik Gin Bitters
Also with an alcohol percentage of 40%, Herb Afrik Gin Bitters is a herbal blend made from African medicinal herbs, spices, roots, fruits, and barks, carefully selected for their potency. With a smooth taste and soothing effect, it aids digestion, relieves constipation and menstrual cramps, and promotes free flow in women. It also boosts appetite and offers both wellness benefits and distinct flavor.
Chevalier Brandy
Chevalier Brandy is a premium blend of matured grape distillate aged for over five years in oak barrels. Sourced from certified European distilleries, it undergoes strict quality processes to achieve its distinctive taste. With a rich, refined flavor and 40% alcohol content, it stands as a top-quality brandy for connoisseurs.
Mandingo Bitters
Mandingo Bitters is crafted from a blend of medicinal herb extracts, offering a natural remedy for indigestion while serving as an effective appetite booster. Rich in antioxidants, it supports overall well-being. With a 22% alcohol content, Mandingo Bitters is also favored by men seeking an extra boost.
Takai Liqueur
TAKAI Liqueur is a rich blend of roasted Ghanaian cocoa and coffee, naturally extracted for a smooth, sweetened taste. Known for its antioxidant properties, it also serves as a digestive. With a 27% alcohol content, TAKAI offers a refreshing and flavorful experience.
Ghana’s Alcoholic Beverage Industry – Overview & the Worth
Ghana has a very vibrant and ever-growing alcoholic beverage industry. The industry has a very high potential for growth. Although figures about the worth of Ghana’s industry are limited, it is estimated that the alcoholic beverage industry in West Africa is valued at $13.2 billion and is projected to reach $21.8 billion by 2032. The regional industry is estimated to grow at a rate of about 7% between 2024 to 2032. With Ghana being a major player in the regional industry, the value of the industry locally could also run into billions of dollars.
The United States Department of Agriculture’s Ghana Alcohol Beverages Report reveals that despite the numerous manufacturing companies in Ghana, the country still imported alcoholic beverages worth $56 million in 2019. The imports consistently increased to hit $87 million as of 2023. Fitch Solutions data also reveals that spending on alcoholic drinks increased by 13.6% and consumption also grew by 52% in 2023.
The main categories of alcoholic beverages consumed in Ghana include beer, wine, and spirits. Major import destinations are the EU, India, Togo, South Africa, the United Kingdom, and the United States of America.
Major competitors of GIHOC who produce top brands of beer are Guiness Ghana Breweries and Accra Breweries Limited.
As part of the government’s policy to protect the young ones and minors from being influenced to consume alcoholic beverages, the Food and Drugs Authority has banned celebrities from sponsoring or advertising alcoholic drinks. In addition, media houses are prohibited from advertising alcoholic beverages during the day while the legal purchasing age is 18.
The industry has a huge potential. The Ghana Alcohol Beverages Report projects a 5.5% increase in consumption assuming the status of the “fastest-growing” alcoholic beverage. Wine and spirits are also projected to grow by 3.8% and 3.4% respectively over the medium term.
“Over the medium term, both beer and spirits consumption will see upward growth. Household income growth will increase beer consumption. As with many countries in Africa, beer tends to dominate alcoholic drink consumption patterns,” parts of the report read.
The Market Share of GIHOC
Considering the over close to 7 decades of experience and existence of GIHOC, in addition to the quality brands it produces, one would expect that it would stand tall in the alcoholic beverage industry in Ghana. Unfortunately, the once vibrant distillery that served parts of West Africa continues to diminish at an alarming rate. It has become a sleeping giant as others grab its share of the market.
Although information about its market share is not readily available, officials recently confirmed that its stake in the industry has been dwindling for some years now.
Acting Chief Executive Officer (CEO) of GIHOC Jones Borteye Applerh, recently revealed that years of financial mismanagement, outdated machinery, and operational inefficiencies have severely weakened the company’s market position.
Despite having an installed production capacity of 15,000 bottles per hour, aging equipment—some dating back to 1968—has significantly reduced output to just 2,000 bottles per hour, making it challenging for GIHOC to meet market demand. He further disclosed that the company has lost the trust of key stakeholders, including creditors and suppliers, further compounding its operational struggles.
Other Challenges of GIHOC
The following are some of the operational issues GIHOC has been grappling with;
Profitability Issues: Although the company has performed creditably well to sustain itself, its financials in recent years have become a major concern. According to the Annual Revenue & Cost Trend Analysis of GIHOC cited by The High Street Journal, the company has been making huge losses since 2019. The company was profitable in 2016, 2017, and 2018, but by 2019, it recorded a loss of GH₵ 1.35 million. The losses have since worsened, with a staggering loss of GH₵ 15.5 million in 2022. This reflects serious financial distress threatening the sustainability of operations.
Rising Operational Cost: One major factor affecting the profitability of GIHOC is an increasing operational cost. This partly emanates from the astronomical increase in staff ballooning the wages and salaries. From 169 employees in 2016, the number has jumped to hit 557 as of 2022 representing close to 230% in 6 years. While staff strength is increasing, sales volumes are rather decreasing. Wages and Salaries increased significantly from GH₵ 3.9 million in 2016 to GH₵ 20.7 million in 2022. Other Costs also increased from GH₵ 41.2 million in 2016 to GH₵ 68.0 million in 2022.
Declining Sales: The number of alcoholic beverage cartons sold has drastically declined from 602,275 in 2016 to 299,295 in 2022, a nearly 50% drop in sales quantity. This decline suggests reduced demand, loss of market share, or production inefficiencies.
Depreciation of Assets: As confirmed by the current acting CEO, many of the machinery of the distillery are obsolete and their efficiency has drastically reduced. This is corroborated by the Annual Revenue & Cost Trend Analysis which reveals that depreciation costs more than doubled from GH₵ 1.7 million in 2016 to GH₵ 5.5 million in 2022.
Employee Benefits Issues: Employees have protested over delayed salaries, unpaid provident fund and Social Security and National Insurance Trust (SSNIT) contributions, and the removal of transport allowances without prior consultation.
The company as it stands now, per the Annual Revenue & Cost Trend analysis is making a loss of GH₵ 51.92 per every carton sold which was a profit of GH₵ 5.19 per carton sold as of 2016. This means that for every carton sold, the company is making a loss instead of a profit, a clear indication of unprofitable pricing, high production costs, or declining sales margins.
The Way Forward
Ghana’s history with alcoholic drinks even from the pre-colonial era till now shows that it is a viable market for alcoholic beverages. Alcoholic drinks have been closely knitted into our cultural, social, and religious traditions.
For the start, the new government through the Minister for Trade, Agribusiness, and Industry, Elizabeth Ofosu-Adjare has signaled that her administration as part of the reset agenda is set to holistically assess the financial health of GIHOC. This is a laudable initiative since it sets the tone for renewed hope for the company.
The Minister who paid a working visit to GIHOC further revealed that the financial assessment will help provide a bespoke intervention to revive the company. She further indicated that the company will also benefit from the flagship 24-hour economy initiative. However, there are certain interventions and reforms needed at GIHOC to put it on a different pedestal;
- Salaries, emoluments, and allowances of senior management should be tied to performance and profitability. This will change their attitude to work and bring a source of motivation for hard work.
- Upgrade of Machinery and Modernization should also be a priority. With the current production capacity very limited to due the depreciation of machinery, there is a need for a phased replacement of worn-out machinery. This should also be complemented with modern efficient production technologies.
- Debt Management and Financial Restructuring as already signaled by the Minister is a laudable intervention. The company must implement strict financial discipline, renegotiate debts with creditors, and explore strategic partnerships or government support to stabilize its finances. A forensic audit can also help identify and address areas of financial mismanagement.
- Aggressive Brand Revival and Market Repositioning are very crucial. It is not a known fact that GIHOC produces products of high quality. However, its share is dwindling partly due to marketing and branding.GIHOC should embark on aggressive marketing, product innovation, and customer engagement strategies to regain lost market share.
- Strengthening relationships with suppliers and adopting a lean supply chain approach will help reduce production bottlenecks and ensure the steady availability of raw materials at competitive prices.
To sum up, the alcoholic beverage industry in Ghana has great potential for growth considering how alcoholic drinks have become an integral part of Ghanaian cultural settings since pre-colonial times, during the colonial period, and even in the modern day. All available research concludes the industry is on a trajectory of growth and will continue to grow into the future. GIHOC with its experience and existence cannot continue to play the fiddle in such a booming industry. It must be carried along by the reset agenda to position it as a market leader in the multi-billion dollar industry.
