Heineken expanding Sedibeng brewery as demand grows

Heineken South Africa has embarked on a €60m (R952m) expansion of its brewery in a bid to ramp up capacity to meet the growing domestic demand for premium beer.

Construction is underway at the brewery in Sedibeng, southwest of Johannesburg, where the company is producing ciders and beers such as Heineken, Amstel, Windhoek and Strongbow.

The expansion of the brewery, which is the largest outside Europe, will see it grow production from 5.3 million hectolitres to 7.5 million hectolitres a year by 2020. A hectolitre is equal to 100 litres.

Managing director Gerrit van Loo said Heineken has enjoyed "quite good growth over the years", with its beer accounting for 18% of the local beer market.

Speaking to Fin24 during a tour of the brewery modelled around Heineken’s facility in Seville, Spain, Van Loo said the investment was crucial to regional growth and the local economy. He was confident that the company was no longer a small player in a country dominated by SA Breweries, which is owned by Anheuser-Busch InBev, the world’s largest brewer.

"We are no longer a small mouse. We have been able to compete with the elephant which is AB InBev," he said, adding that competing with the company had been "extremely difficult" due to its scale.

"A lot of companies have tried to compete in this field," he said.

Work at the Sedibeng brewery is expected to be completed in the first half of 2020, and add more jobs in a brewery which is among the top five most automated Heineken breweries in the world.

"We have been surprised by the growth, given the current economy, but it seems people love our beer," said Van Loo.

South Africa contributes about 3% to global production of Heineken, and beverages brewed at Sedibeng are exported to regional countries such as Namibia and Botswana.

The company, headquartered in Amsterdam, has acquired a few local beers over the past few years, including Soweto Gold, which it bought in 2017, as well as a 49% stake in Cape Town-founded Jack Black beer.

In March 2017, the company fully acquired Stellenbosch-based Stellenbrau, as craft beer gained popularity in the country.

According to Van Loo, South Africa is the biggest beer market in Africa, with a considerable cider market. The company sources the apples used for production of ciders from local farms, and plans to increase the sourcing of agricultural materials from South Africa from 14% to 23% in 2020, in a drive to benefit and grow local industries.

ZAR/USD
16.77
(-0.09)
ZAR/GBP
21.15
(-0.12)
ZAR/EUR
18.95
(-0.11)
ZAR/AUD
11.66
(-0.17)
ZAR/JPY
0.16
(-0.09)
Gold
1798.22
(+0.06)
Silver
18.69
(+0.13)
Platinum
824.50
(+0.30)
Brent Crude
43.14
(+2.10)
Palladium
1961.36
(+0.61)
All Share
55417.89
(-0.66)
Top 40
51154.08
(-0.74)
Financial 15
10472.31
(+1.28)
Industrial 25
76134.69
(-1.67)
Resource 10
52483.78
(-0.20)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1951 votes
I am taking a hit, but should be able to recover in the next year
23% - 2547 votes
My finances have been devastated
34% - 3802 votes
It's still too early to know what the full effect will be
25% - 2730 votes
Vote