TANZANIA: Diageo brewery ups pressure on SABMiller
Diageo and EABL's Serengeti Breweries opens brewery in Tanzania
Diageo and its East African business, East African Breweries Ltd (EABL), said today (29 November) that their subsidiary in Tanzania, Serengeti Breweries, has opened a US$55m brewery in Moshi. It is able to produce 500,000 hectolitres per year and marks the third brewery in the country for Serengeti, which is 51%-owned by EABL.
The move increases the pressure on SABMiller's Tanzania Breweries. The SABMiller unit still leads the market in volume terms, but Diageo's swoop for Serengeti Breweries last year has made the group a stronger number two player.
“The construction of this new brewery in Tanzania demonstrates the huge growth potential we continue to see in East Africa," said Diageo's president for Africa, Nick Blazquez. Its Moshi brewery will produce Tusker lager and premium Serengeti lager for the East Africa region in general, as well as for Tanzania.
Africa is emerging as a key growth market for several brewers, though predominantly Diageo, Heineken and SABMiller. Blazquez added: “Over the past five years, Diageo has invested more than GBP1bn (US$1.5bn) in building robust and sustainable growth businesses in Africa, and we will continue to look at investment opportunities to support the growth of our brands and to strengthen our routes to market.”
Over the past year, Diageo and SABMiller have dismantled their cooperation in East Africa, increasing competition in the region. As part of Diageo's deal to gain control of Serengeti Breweries, the group's EABL business agreed to sell a 20% in SABMiller's Tanzania Breweries. This year, meanwhile, EABL agreed to acquire SABMiller's 20% stake in Kenya Breweries for around US$225m, giving it full control of the Kenya-based beer business. Both of the deals are expected to complete in December.
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