Heineken, Diageo to close JVs in Africa

ELEVEN years ago, Dutch brewer Heineken and spirits maker Diageo started joint ventures to grow their products in South Africa and Namibia. Now the companies are cashing in and ending their collaborations, according to a Reuters report.

The report indicated that Diageo would receive net cash of 2.5 billion rand ($198.4 million). With its Johnnie Walker, Smirnoff and Guinness brands, the company accounts for 40% of the South African market which is also its fifth largest spirits market by volume. Diageo is confident to operate independently in this country.

Heineken will receive 1.9 billion rand from the transactions. Moving forward, it eyes further increase in its stake in DHN Drinks, the entity holding the licenses for the drinks portfolios, to 75%. Namibia Breweries Ltd (NBL) will own the remainder. Their 75%-25% partnership also extends to another entity, the Sedibeng brewery in Gauteng, Johannesburg. In addition, they will start a joint venture in South Africa, the region's biggest beer market which is seen growing at about 1.5% per year, the report also said.

Diageo will also relinquish its 15% stake in NBL to Heineken. This would increase Heineken’s indirect ownership to 29.9%.