Registered users can save articles to their personal articles list. Login here or sign up here

Heineken vs SABMiller

New brewery targets beer ‘monopoly’ in South Africa.

Heineken NV, the world’s third-largest brewer, said it’s increased its market share in South Africa fivefold during the past four years and now plans to capture more of rival SABMiller (JSE:SAB) Plc’s customers.

Amsterdam-based Heineken’s share of the South African market has grown to about 11% from 2% four years ago and the company is focused on growing that further, Africa Managing Director Tom de Man said in an interview last week.

SABMiller, which was founded in Johannesburg in 1895, controls about 89% of the South African beer market, according to spokesman Nigel Fairbrass. Each year the company sells about 25m hectolitres (550m gallons) of beer in the country. This makes it “the largest existing monopoly market left in the world,” de Man said. He declined to say how much of this market Heineken hopes to capture.

As part of its growth strategy, Heineken on Thursday opened a 3m hectolitre a year brewery at Sedibeng, south of Vereeniging near Johannesburg. Work has already begun on expanding the brewery, built at a cost of R3.5bn, to 4m hectolitres, Heineken said.

The company has also repackaged its Amstel brand for South Africa, having in February introduced it in a 660ml returnable bottle to establish itself in this market. The larger bottles are popular in South Africa’s townships because they’re cheaper. It will take 12 months to see if the strategy is effective, de Man said.

Heineken’s Amstel brand, which was brewed by SABMiller in South Africa under license until 2007, competes directly with SABMiller’s Castle Lite brand in the 660ml bottles. Recommended pricing makes Amstel about 50c to R1 more expensive than Castle Lite, de Man said, making it a “slightly more premium” product.

SABMiller, the world’s second largest brewer, will have to “fight” for sales in South Africa, de Man said. Brandhouse Beverages, Heineken’s South African joint venture with Diageo Plc and Namibia Breweries, has 900 salesmen pushing sales of beers such as Amstel and Heineken, he said.

South Africa is the world’s ninth-largest beer market, after the UK, according to Gavin Pike, marketing director at Brandhouse. The US is the largest beer market. – Bloomberg


Comments on this article are closed.





Follow us:

Search Articles:Advanced Search
Click a Company: