Abidjan – Heineken’s latest quest to seize a greater
share of emerging markets has the brewer on a collision course with Groupe
Castel in one of Africa’s fastest-growing economies.
Officially opened on Wednesday, the Brassivoire brewery
is the product of a joint venture with CFAO SA and cost 150 million euros ($160
million) to build. Located 24 kilometres north of the commercial capital,
Abidjan, the facility is already producing Ivoire lager, a brand the world’s
second-largest brewer is using to compete with market leader Castel’s Flag
and Solibra Bock.
“Ivory Coast is a burgeoning country,” CEO Jean-François
van Boxmeer said in an interview at the plant. “It’s one of the fastest-growing
economies in the world. Government policies are sound. They’re favouring
investment.”
The move is part of Heineken’s broader strategy to target
developing markets to help offset slowing growth in Europe and the US. Both
Heineken and Castel are said to be among companies bidding for a majority stake
in Coca-Cola Beverages Africa, according to people familiar with the matter.
Read also: Stellenbrau poised for growth after Heineken deal
After emerging from a decade of conflict and instability
a year earlier, Ivory Coast has averaged economic growth of 9 percent a year
since 2012 and has attracted international companies such as supermarket chain
Carrefour SA and Burger King. Ivorians drank an average of 11.8 litres of beer
per person last year, compared with 36 litres in Cameroon and 68 litres in the
Netherlands, Brassivoire said in an emailed statement.
“Ivory Coast has a per-capita consumption that’s still
relatively low and, until now, little competition,” Van Boxmeer said. “We are
very confident.”
Nigerian woes
The addition of a new West African market could help
lessen the impact of Heineken’s struggles in Nigeria, where its Nigerian
Breweries Plc unit is battling an economic downturn, rising costs and a shortage
of foreign exchange that’s hampered imports of raw materials. Profit at the
Lagos-based company slumped 26 percent in 2016, while the shares are down 15
percent in the year to date.
Other recent Heineken investments in Africa include the
addition of 300 sales staff in South Africa and the acquisition of Stellenbrau,
a craft brewer based a short drive from Cape Town.
In Ivory Coast, the new brewery has capacity of 160
million litres a year and Heineken could add more brands as it strengthens its
market position, Van Boxmeer said.
“Ivory Coast is a key market in Francophone West Africa,”
the CEO said. “It’s a long-term investment. Once we start, we’re not going
away. We’re starting small but Ivory Coast will grow and we will grow along
with it and there are many things to do.”
BLOOMBERG