Heineken Looks to Premium Brands in South African SAB Battle

Johannesburg, Capital Markets in Africa: Heineken NV’s recent introduction of Sol Mexican lager to South Africa forms part of a plan to boost its market share in a country dominated by soon-to-be-acquired SABMiller Plc.

The Dutch brewer brought Sol to South Africa this month and plans to add more premium brands there, country head Ruud van den Eijnden said in an interview Tuesday. Growth will also be achieved through established brands such as Heineken, Amstel and Windhoek, he said.

“South Africans love premium beers, with 39 percent drinking them on a regular basis,” Van den Eijnden said. South Africans spent more than 103 billion rand ($7.1 billion) buying beer in 2015, an increase of 9.1 percent from a year earlier, according to researcher Euromonitor International.

Heineken took full control of its South African operations in April afterdissolving a joint venture with Diageo Plc. Its share of South Africa’s beer market has remained at about 10 percent over the last five years, dwarfed by SABMiller’s 80 percent. SAB’s imminent takeover by Anheuser-Busch InBev NV will give the brewer access to more global brands and make competition even more intense, Van den Eijnden said.

“SABMiller is already a formidable competitor,” he said. “Its new parent company has even more financial firepower than SAB, so in that sense I think competition will intensify.”

Heineken has added 300 jobs in South Africa this year, with 95 percent of these in its sales department, doubling its local sales team, Van den Eijnden said. That has improved its ability to stock shelves and increase product sold, he said.

“It’s probably helpful that the market leader will increase its focus on premium brands as that will pull more customers up the ladder to buy these higher-value beers,” Jonathan Fyfe, an analyst at Mirabaud Securities in London said by phone Wednesday. For Heineken, bringing in more premium beers is “stepping up its focus on these brands and a defensive move.”

Source: Bloomberg Business News