EAST AFRICA – Heineken’s approved takeover of South African wine and spirits group Distell has created commercial and logistical synergies between the brands in South Africa and Namibia, offering new growth opportunities for the brands in other markets, such as Kenya and Tanzania.
The acquisition of Distell enables Heineken to explore new categories, adding to its portfolio brands such as Amarula, Hunter’s, Savanna, 4th Street, Klipdrift, Nederburg, Richelieu, Viceroy, and J.C. Le Roux.
The tie-up that received the final nod from South Africa’s competition authority has led to the formation of a new entity called Sunside Acquisitions Limited (Newco) that will be jointly owned by Heineken (65 percent) and Distell (35 percent).
Newco, the unlisted public company, will house Distell’s big portfolio of best-selling local brandy and whisky, as well as its cider brands, other ready-to-drink beverages, and its big range of wine.
As part of the transactions, the Dutch alcohol giant will transfer its Eastern African distribution business to Sunside Acquisitions Limited. Distell will also bring its interests in its subsidiaries, including Kenya Wine Agencies Limited (Kwal) to the new entity.
In March 2022, the distribution business operations in Tanzania, Uganda, Kenya, and South Sudan were valued at R885.5 million (US$58m).
Heineken said last week that the new subsidiary will be focused on developing its business in certain key markets outside of South Africa and Namibia, including Kenya, Uganda, Tanzania, Zambia, Botswana, Zimbabwe, and South Sudan while continuing to service Lesotho and Eswatini.
“Concerning Newco’s business in Africa, the combination of the three Heineken, Distell, and NBL export businesses, together with Distell’s on-the-ground capabilities in key markets, will result in an expanded and enhanced footprint in the region,” said Heineken in a prospectus for the deal.
“This will provide the opportunity for Newco to invest behind and grow the consolidated brand portfolio in existing and new markets (as the consumer demands), and in some markets, such as Kenya and Tanzania. Newco will have a materially stronger platform for the distribution of the full portfolio, including NBL products, which are already sold there.”
For the East African alcoholic beverages market outlook, Imarc Group projects a CAGR of 8.8% during the forecast period of 2022-2027.
However, most countries like Kenya are also proposing an increased sin tax to squeeze out more funds to sustain the government budget.
Kenya Revenue Authority (KRA), in a public notice, has proposed an upward adjustment of fees on excise stamps by almost four times, a few months after implementing an excise duty inflation adjustment on beer, juice, wine, water, and confectioneries.
For all the latest food industry news from Africa and the World, subscribe to our NEWSLETTER, follow us on Twitter and LinkedIn, like us on Facebook and subscribe to our YouTube channel.