By Gbenga Agbana

Thursday, 13 Jan 2011

In a move seen by analysts as an attempt to further entrench its influence in the Nigerian beer market, the Amsterdam, Netherlands-based Heineken NV, the world’s third-largest brewer by volume, has said that it has bought controlling interests in five Nigerian brewery companies.

The acquisition, according to the company, is to help alleviate a shortage of production capacity in Africa’s second-biggest beer market.

Heineken NV already owns 64 per cent stake in Nigerian Breweries Plc and has controlling stake in Consolidated Breweries.

The company, according to a statement it issued on Wednesday, acquired two holding companies of the Sona Group, which had controlling interest in Sona Breweries, International Beer and Beverages Industrial Limited, Benue Breweries, Life Breweries and Champion Breweries.

Most of the newly acquired brewing companies had gone through a difficult time with inadequate working capital, low productivity, poor market share and low employee morale.

The company said that the new acquisition would add additional 3.7 million hectolitres to the group’s capacity and improve the geographic spread of its production.

Heineken, which currently has a capacity of about 12 million hectolitres in Nigeria, said in the statement that it had bought two holding companies from the Sona Group, but did not disclose the amount spent to acquire the firms.

Speaking in a telephone interview with our correspondent on Wednesday, the Investor Relations Manger, Heineken NV, Mr. George Toulantos, confirmed the acquisition, saying that the decision was taken to consolidate the company’s position in the Nigerian beer market.

He said, “We have looked into leveraging the opportunities in Nigeria to increase our capacity. Nigeria is one of the largest profitable markets and we can strengthen our capacity in the country, especially in the North-Central and the southern part of the country.”

Bloomberg reported that Heineken said it was looking to expand in emerging markets to counter sluggish consumer spending in Western Europe, which represents more than 50 per cent of its revenue.

Nigeria’s beer market, according to it, has shown a compound annual growth rate of nine per cent over the 10 years to 2009, when national consumption of the beverage was estimated at 16.5 million hectolitres.

“This important move reflects Heineken’s strategy of increasing our exposure to and growth from developing markets,” Heineken’s President of Africa and the Middle East, Mr. Tom de Man, said in the statement, noting that the acquisition “will significantly strengthen our platform for future growth.”

Responding to the development, Public Relations Adviser, Nigerian Breweries Plc, Mr. Yusuff Ageni, said, “With Heineken’s announcement that it has acquired from the Sona Group, two holding companies, which have controlling interest in Sona, IBBI, Benue, Life and Champion breweries, we look forward to exploring further ways of more intense cooperation with Heineken in this regard during 2011.

“The opportunity to increase capacity and expand into new areas will significantly strengthen our platform for future growth in this highly competitive market place. This is an exciting time in the Nigerian beer and non-alcoholic malt market, and for our company.”

Commenting on the development, the Managing Director, Signet Investment and Securities Limited, Mr. Dipo Aina said, “We may have monopoly in the beer market, because the only other major brewery in the country will be Guinness. I celebrate with the shareholders of Champion Breweries since they now have a major investor, who will turn the company’s fortune around.”

Source: Punch