…As AB InBev looks to crack open African market
By Hilary Mare
THE world’s largest brewer, Anheuser-Busch InBev, plans to drive its Africa sales by introducing cheaper beer brands to the continent’s market, including the Namibian space.
AB InBev has confirmed that it will export African beer brands to its markets around the world, as the Budweiser maker seeks to maximise the potential of a continent that was key to its decision to buy rival SABMiller for US$103 billion.
The Namibian market has long been dominated by Namibia Breweries Limited (NBL), which has been in existence for nearly a century.
However, the Namibian brewer has already faced some competitive, following the emergence of SABMiller’s US$34million, 260 000 hectolitre brewery in Okahandja two years ago.
NBL Managing Director, Wessie van der Westhuizen, said this week that company’s brewing ethos and quality credentials will continue to appeal to the discerning beer drinker and through its innovations will seek to deliver offerings that appeals to the changing needs of consumers.
“While any new competition brings along huge opportunity to leverage strategic synergies and introduce new brands to our market, we have been competing very successfully against our competitors, who are all formidable players in the beer market.
“Therefore, whilst we are very aware of the increase in the competitive landscape, we are confident in our own strategies, innovation and breakthrough initiatives going forward.
“In the alcohol beverages industry where responsible conduct is of utmost importance, we welcome competition, provided such competition embraces the necessary practices to manage externalities,” van der Westhuizen said.
In a bid to further dilute markets, including Namibia, AB InBev says it will introduce global beer brands such as Budweiser, Stella Artois and Corona into African markets.
The world’s biggest brewer plans to sell packs of eight African beer brands outside the continent, including Castle, the dominant brand in South Africa, Kilimanjaro of Tanzania and Nigeria’s Hero.
AB InBev has already forecast that lower and zero strength beer will grow from a small base, to make up 20 percent of its sales by the end of 2025.
“In many (African) countries people drink between 9 and 11 litres (of commercially produced beer) per person a year, so there’s lots of room for growth,” said Ricardo Tadeu, who heads up AB InBev’s African operations.
“We need to develop our mainstream beer, make it affordable enough to tap into the informal beer market, not only informal beer but informal alcohol in general that you have in those markets,” said Tadeu, in an interview with Reuters.
The global average per capita beer of consumption rate is 44 litres per year, according to Global Risk Insights.
The World Health Organisation (WHO) 2016 Global Status Report on Alcohol and Health, ranked Namibia fifth on the African continent, in terms of annual alcohol consumption, with the average Namibian consuming 9.62 litres of alcohol per year.
About 67 percent of the alcohol consumed in Namibia comes from beer, while spirits accounts for 20percent, wine 7percent and ‘other’ 6percent.
During the launch of SABMiller brewery in Namibia in 2015, its country representative, Cobus Bruwer, said that the company already had a long history in Namibia, having imported beers to service the local market for more than two decades.
“The company has an estimated 22percent of the local market, with popular brands including Castle Lager, Carling Black Label and Castle Lite,” he said at the time.
The so-called homebrew market is also set to become a battleground for brewers, going forward.
Analysts say that the informal alcohol market is worth four times the continent’s US$11 billion commercial market, because homebrews have a strong tradition, rooted in centuries-old African rituals, such as the homecoming of a young man, after initiation.Namibia Brewerieshas already positioned itself in the sub-Saharan African market. The company is mostly known for its Windhoek brands, but has also teamed up with global giants Heineiken and Diageo. This partnership includes South African company, Brand House, distributing Windhoek and Heineken, amongst other brands.
SABMiller Namibia was established in 2010 to house the company’s operations in Namibia. It is 60 percent owned by SABSA Holdings, a wholly owned subsidiary of SABMiller. The other 40 percent is held equally by local Namibian partners, Onyewu Investments (20 percent) and 20 percent by three charitable trusts, for the benefit of local communities.
NBL’s Duffy said this week that the local brewer valued competition, as chance to reinforce its unique value proposition.
“We believe that when alcoholic beverages are consumed responsibly, and when the industry acts responsibly, alcoholic beverages can deliver the benefits of consumer’s choice, job creation, excise and the like.
“However, it is important that players in this industry embrace best practice, to minimise the potential harmful impacts, be that through consumer education, or responsible practices in marketing or pricing their products. It is under these conditions that we welcome competition, and see it as an opportunity to reinforce our unique value proposition,” Duffy added. – Additional reporting by Reuters
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