Namibia is developing into an interesting chapter to watch within the ever scintillating “Beer Wars” with SABMiller preparing an assault within the “enemy” territory.
The South African born global beer brewing giant, SABMiller announced this week that it will break ground in Okahandja, in April this year, for the construction of its $34m 260 000 hectolitre brewery.
While Namibia is relatively a small market, with a total population of about 2.1million people, the energies spent in wrestling for that market could have regional implications.
SABMillers’ plans to launch an on the ground offensive in Namibia has endured a lengthy delay. The Okahandja plan was initially set to enter construction phase in 2010 but seems to have been delayed by rezoning obstacles. Some Namibian media have reported that SABMiller has been looking to build a plant in that country for about 20 years.
Set on a 7.2ha piece of land and about 70 kilometres north of the Namibian capital Windhoek, the Okahandjo project has now passed the rezoning hurdle with SABMiller saying construction will start soon and production in about 18 months time.
This will position SABMiller to challenge the Namibia Breweries which does not only control that country’s market but is giving SABMiller some tough time in South Africa and in other key southern African markets.
A read through SABMiller’s latest trading update marks the significance of the African markets. With the matured markets, mainly Europe, stumbling brewers are looking into the emerging markets, China, South America and Africa, for growth.
SABMiller’s trading statement for the quarter ended December show European markets registering organic volume growth of only 1% with many segments of that market deeply in the red. Several African markets recorded double digit growth in the same period and still show low per capita beer consumption level of around 10 litres/per year. This is low compared to European levels where countries like Germany, Ireland and Czech Republic top the 100 litres mark.
Namibia’s per capita beer consumption is quoted around 40 litres per annum which is quite high by African standards which means that market is not there for the taking. As such serious wrestling is going to take place for market share between SABMiller and Namibia Breweries. By comparison South Africa’s per capita beer consumption seats around 60 litres per yer.
The 93 years old Namibia Breweries has positioned itself well for the sub Saharan African market. The company is mostly known for its Windhoek brand but has also teamed up with global giants Heineiken and Diageo. This partnership takes shape through Brandhouse in South Africa which distributes Windhoek and Heineken amongst other brands. Namibia has vested interest in the R3.5bn established by its partners Heineken and Diageo in Sedibeng South Africa. The brewery allowed for the Windhoek brand portfolio to be brewed locally alongside Amstel and Heineken. As such the SABMiller’s move set up in Namibia can be seen as some kind of a strike back.
Commenting about the Okahandja project, SAB MD Mauricio Leyva said “We are most pleased that we are now going to be moving ahead with the construction of the brewery. The local brewery will not only enable us to make more of our key brands available to consumers in the Namibian market, but it will also make a meaningful contribution to the Namibian economy once it is up and running”.
The company said the brewing plant should be operational in 18 months and will be built on a space plan to accommodate future growth. In addition, the company plans to invest in a 750 ml returnable bottle packaging line and warehousing facilities. The estimated investment is N$360-million.
SABMiller’s country representative Cobus Bruwer said that the company has a long history in Namibia, having imported beers to service the local market for more than two decades. “The company has an estimated 22% of the local market, with popular brands including Castle Lager, Carling Black Label and Castle Lite”.
SABMiller established SABMiller Nambia in 2010 to house its operations in Namibia. The Namibia entity is 60% owned by SABSA Holdings, a wholly owned subsidiary of SABMiller. The other 40% is held by local Namibian partners comprising 20% Onyewu Investments and 20% by three charitable trusts for the benefit of local communities.