SPECIAL REPORT AFRICA
DRC (6 plants) , Namibia and Cameroon. The company is unique in producing beers in the most unlikely of countries in Africa, including in Rwanda, Burundi and Congo Republic. Africa is a significant contributor to Heineken’s bottom line, with the Africa and Middle East region’s over 70 breweries making up 14.5% of its total revenue, much higher than Asia Pacific region, with 11.3% The brewer’s iconic brand, Heineken has been introduced in key Africa including Kenya, Nigeria, Ghana and Tanzania, and other central African countries. These countries offer a great opportunity for the brewer for investment due to the popularity of its premium brand, in addition to its regional brands, Primus, Amstel, Star and Mutzig. Heineken is a dominant player in Nigeria, the continent’s most populated country, while maintaining a similar stance in Ethiopia, number two in the continent in population terms, where in addition to two breweries it currently owns, it is set to open a new green-field brewery in July 2014, set to brew 150 million litres of beer a year. The brewer has committed to continuously invest in Africa, investing over US$ 690million per year in the continent, according to Siep Hiemstra, Heineken’s president for Africa and Middle East. SABMiller With roots in Africa, South African breweries (SAB) became SABMiller in 2002 after buying Miller Brewing Company in the USA, becoming one of the few African brands to go international – which has also included forays into Europe, Latin America and
China. Africa contributed 13% of SABMiller’s group revenue in 2013 and is bound to contribute more to the company’s bottom line, as its recent investments in Nigeria and other markets begin to flourish. SABMiller has direct operations in Ghana, Nigeria and in the countries bordering the Indian Ocean all the way from Ethiopia to South Africa and inland into Botswana, Uganda and Zambia. The brewer was one of the first foreign firms to invest in South Sudan, an investment that has since been doubled in capacity, in the early days of its independence. The brewer also covers a chunk of French speaking Africa through its pan-African alliance with Castel Group indirectly. The company’s flagship Castle lager is however exported to a number of African countries. The company also manufactures sorghum based alcoholic beverages including Chibuku and bottled water as it expands its portfolio of non-alcoholic brands which now include Keringet in Kenya and Ruwenzori in Uganda. It also bottles carbonated beverages of Coca Cola around the continent. The brewer has invested aggressively in Africa, with significant investments and market share in Zambia, Uganda (with the recently commissioned Mbarara plant) and Tanzania (where it operates 4 lager plants and 1 sorghum beer plant, after coming into the country in 2004 in a venture with the government that has turned around the fortunes of the former wholly state owned brewery). It announced in 2011 a US$260m investment programme to fund capacity expansion in Uganda, Ghana, Zambia and Tanzania. This was on top of US$1.5 billion that had already been spent in the 5 years leading to 2011. It aims to improve the amount of materials it has to import for its brewing operations into the continent, with a goal of sourcing 60% of its requirements from within the continent by working with farmers to grow barley, sorghum and cassava. In deed SABMiller was the first company to introduce cassava beer 24
JUNE/JULY 2014 | FOOD BUSINESS AFRICA
on a commercial scale when it introduced Impala beer in Mozambique a few years ago. The beer has further been commercialised in Ghana and is slated for release in Zambia. The company has aggressively been growing in Africa, getting into Nigeria in 2009 and opening a second US$80 million brewery in western Ugandan town of Mbarara. Diageo Diageo, through its Guinness brand and well known spirits including Johnny Walker Scotch whisky, is one of the earliest pioneers in Africa; with the company reporting that the first recorded exports of Guinness to Africa was done to Sierra Leone in 1827. The first major overseas Guinness brewery was built in Nigeria in 1963, with Nigeria currently having the enviable reputation of the country with the highest consumption of Guinness in the world, overtaking the mother country of Ireland. The company’s brands, apart from Guinness, include regional brands Tusker, Bell, Serengeti, Harp and Senator; while its spirits brands include Smirnoff vodka and Baileys. According to the company, Africa represents Diageo’s largest group of emerging markets in terms of net sales and employs over 5,300 people (one in four of Diageo’s total workforce worldwide) in its businesses in Africa. Diageo in Africa is comprised of 13 breweries, one of which is with their joint venture in South Africa. These countries include Kenya, Uganda, Tanzania, Ethiopia, Nigeria, Ghana and Cameroon. In addition it brews beer with third party operators in 16 other African countries. PepsiCo The beverage maker has over the last two decades made a come-back to the continent, having exited South Africa in 1985 to protest Apartheid, made a return in 1994 as a new dawn emerged in South Africa with the end of Apartheid, only to pull out after 3 years in the market. The same kind of scenario played out in Kenya, when the company pulled out of the market in the 1970s, only to make a comeback with a US$28.5 million manufacturing facility in 2013, where it is facing up to the perennial rival, Coke, once again. The company has had a long presence in the other East African countries of Tanzania (since 2001) and Uganda (since 1965) The company is aggressively investing into Africa to tap into the opportunity that is unravelling in the world’s last frontier, through its beverage and snacks businesses. The group is also a major player in Nigeria, where its Pepsi, Mirinda, Aquafina and other brands are packaged in 9 bottling plants in the country. With the group amassing 13% of its net revenue from its Asia, Middle East and Africa region, “Africa is the new Asia,” Sanjeev Chadha, head of PepsiCo’s operations in the Middle East and Africa told travelpundit.com in 2012, showing the company is headed for more investment in the region. In sub-Sahara Africa the company is working closely with its bottler Varun Beverages International, a subsidiary of RJ Corp, to grow its market share in Zambia, Mozambique and Morocco. In Zambia Varun is building a US$15 million plant, in addition to its Lusaka plant which was opened just 4 years ago, in Kitwe. It has invested US$30 million in the Lusaka plant, says the head of the foodbusinessafrica.com