Heineken to expand its Egyptian wine business
Al Ahram’s wine unit produces about 8 million bottles of wines each year and brings in about a fifth of Al Ahram’s more than 2 billion Egyptian pounds of revenue a year (EUR 260 million), reports claim. Most of the rest is coming from its 1.1 million hl beer business with brands such as Heineken, Stella, Sakara and Meister.
According to wine writer Jancis Robinson, Egyptian wines are produced mostly from concentrate and from imported grapes, mainly out of Lebanon and South Africa. But local growers have set up vineyards near Cairo. They sell the bulk of their grape production to Gianaclis, as Al Ahram’s wine unit is called. Local wine production is dominated by Al Ahram (77%) and Eibco (23%) according to Heineken’s Africa & Middle East presentation (November 2009).
Today, only about 20 percent of wine sales come from local residents in a country where about 90 percent of the 78 million people are adherents of Islam, which prohibits drinking alcohol.
The government puts restrictions on advertising for alcohol companies, such as limiting billboards to tourist hotspots. Still, there are no official plans to ban alcohol in Egypt, where tourism accounts for some 11 percent of gross domestic product. A better way of limiting the sale of alcohol is the imposition of taxes. Al Ahram must pay a 100 percent fee on the ex-factory price of every bottle of alcohol it produces.
In an effort to boost local wine sales, Heineken has tried to improve the quality of Al Ahram’s wines.
Heineken installed new management in 2006, and has spent some EUR 10 million on quality improvements such as new equipment over the last three to four years. In addition, it has launched new wine brands, hired consultants, and tried to teach the staff at restaurants, shops and bars how to store and serve wine properly.
However, Al Ahram’s sales people still face major hurdles when it comes to telling shop owners how to store wine properly. Al Ahram has air-conditioned warehouses, but when you go to a retail shop you can find the wine stored in 40 or 50 degrees Celsius in the sun.
Only if you like your wine boiled before drinking you will not complain too loudly.
