Heineken expands African unit

Related tags Netherlands

Heineken, the Dutch brewer, has continued to extend its reach into
some of the world's lesser-known beer markets with an agreement to
take a controlling stake in Nigeria's Consolidated Breweries,
writes Chris Jones.

Like its major rivals like SABMiller, Carlsberg and Interbrew, Heineken has been strengthening its positions in more mature beer markets over the last few years (with the recent acquisition of Hoepfner in Germany, for example), as well as moving into major emerging markets such as China and Russia.

But the Dutch firm has also been one of the few beer makers to invest in lesser markets, with acquisitions in Costa Rica, Nicaragua, Panama, the Lebanon and Egypt over the last few years.

Africa has been a particularly appealing market for Heineken over the years - indeed, its presence there dates back to the early years of the 20th century - and the latest move by the brewer sees it increase its stake in one of its major investments there.

Heineken has increased its stake in Consolidated Breweries from 24 per cent to 50.05 per cent after reaching an agreement to buy out an unnamed fellow shareholder for an undisclosed sum.

Consolidated Breweries has a 9.5 per cent market share in Nigeria and is the number three brewer in the domestic beer market with a turnover of €40.5 million. Although it brews Heineken's French brand 33 Export under licence, Consolidated's main focus is on the low-price segment of the market, where it sells around 965,000 hectolitres a year.

As such, it is an excellent fit with Heineken's other Nigerian business, Nigerian Breweries, in which the Dutch group owns a 54.2 per cent controlling stake. This company is focused on the premium end of the market, with a broad portfolio of international and local brands, including Heineken and Amstel.

But Nigerian Breweries has a 56 per cent market share, with sales of 5.7 million hectolitres in 2003, raising the possibility of competition concerns following the acquisition of Consolidated.

Nigeria is Africa's number two beer market (after South Africa), with sales of around 10.2 million hectolitres in 2003, according to Heineken. As the undisputed market leader, the Dutch company is well placed to benefit from the expected 3 per cent increase in the market over the next few years.

Related topics Markets Heineken