Heineken and Diageo extend Africa team-up plans

By Neil Merrett

- Last updated on GMT

Related tags: Diageo, South africa

Diageo and Heineken are to expand their cooperation within the
South African market to tap into growing demand for premium beers,
ciders and ready-to-drink (RTD) beverages.

Both companies, along with local group Namibia Breweries Limited (NBL), are to form two new nationwide joint ventures called DHN Drinks and Supplyco, which will jointly produce and bottle the groups' major brands in the country. A spokesperson for Diageo told BeverageDaily.com that the cooperation would ensure that all three companies were better positioned to meet growing demand for premium brands amongst the country's emerging middle class consumers. They added that the two Europe-based brewers had achieved great success in the country through their existing brandhouse cost reduction joint venture and had therefore decided to extend the strategy with the two new entities. As part of the latest agreement, Diageo and Heineken will each hold a 42.25 per cent share of DHN drinks. NBL will hold the remaining 15.5 per cent, while brandhouse will continue to market and distribute the products. Diageo estimates it will invest £100m (€130m) in the project. Additionally, a new bottling plant and brewery will be contracted in the Gauteng province of the country to produce key brands like Guinness, Amstel and Namibia's cider. Diageo says it will claim a 25 per cent stake in the plant, with Heineken holding the remaining 75 per cent. The Diageo spokesperson added that company would potentially consider additional joint venture agreements in other markets should there be sufficient opportunities to do so. According to Tom de Man, president of Heineken's African and Middle Eastern operations, the expansion of the joint venture reflected the growing significance of African markets to its operations. "With Africa now Heineken's fastest growing region, with the Heineken brand growing 70 per cent in South Africa and Amstel very clearly still a favourite with South African consumers, there is no better time to invest in growth,"​ he stated. "Our three businesses already have a strong, successful partnership and I am excited about the new opportunities that the combination of our brands and local brewing will create."

Related topics: Diageo, Heineken

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