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Heineken invests in South Africa as turf war with Anheuser-Busch InBev intensifies

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Heineken is firming up its capacity in South Africa as the brewer looks to loosen Anheuser-Busch InBev's grip on the country's beer market.

Heineken is taking on Anheuser-Busch InBev in South Africa with a brewery upgrade

Heineken is taking on Anheuser-Busch InBev in South Africa with a brewery upgrade

The Dutch brewer has told just-drinks this week it is investing in its Sedibeng brewery near Johannesburg with the aim of hitting annual capacity of 7m hectolitres in the country. Heineken is also expanding its South African beer portfolio with the addition of low- and no-alcohol brands including Heineken 0.0, Windhoek Lite, Amstel Radler.

"We are gearing up to be a solid player in the industry," Heineken South Africa MD Gerrit van Loo said.

The investment highlights the fight for South African beer drinkers in the wake of A-B InBev's SABMiller takeover in 2016. Heineken's share lags far behind market leader A-B InBev, which became the dominant brewer in South Africa through the SAB purchase. Since the takeover, A-B InBev has overhauled its portfolio and ramped up distribution of non-SAB brands such as Budweiser and Corona. Sales in South Africa, and the wider African beer market, was given as a key reason for the SABMiller buy.

Recently, however, the brewing giant has been forced to defend weakness in South Africa in quarterly results. In May, CEO Carlos Brito said South Africa faces macro-economic challenges including unemployment and high inflation that are putting pressure on beer sales.

According to GlobalData figures for 2017, A-B InBev accounted for 88% of South Africa's beer volumes and 86% of beer value. Former SAB brands Carling Black Label and Castle account for the majority of the company's South Africa volumes.

Speaking to just-drinks today, Heineken's van Loo said the Dutch brewer is a "challenger company" in South Africa, which is a "traditionally competitive landscape with a dominant player".

"Our local South Africa ambition is to reach an output of 7m hectolitres," he added. "To achieve this, we have increased investment in our business, including infrastructural investment into the brewery."

South Africa is not the only African country where Heineken is battling A-B InBev. In March, Heineken opened a US$100m brewery in Mozambique, where A-B InBev controls 99% of the beer market through the Cervejas De Moçambique unit, also inherited from SAB.

Is Anheuser-Busch InBev preparing for Heineken's China push? - Click here for a just-drinks comment


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