Castel buys Standard Breweries in Ibadan

Never mind the world economic crisis: beer consumption in Nigeria is going up. In 2008, Nigeria produced more than 15 million hl beer, up 15 percent on the previous year, says the Barth Report.

For the first half of 2009 ended 30 June, Nigerian Breweries (Heineken) reported a 21 percent increase in turnover over the same period last year, which is a good indication as to which way Nigeria’s beer consumption is going.

Small wonder that Groupe Castel continues to look for more breweries to buy in Nigeria. Last year, Mr Castel bought the International Breweries in Ilesha from Germany’s Warsteiner brewery. This spring he was rumoured to clinch a deal with Nigeria’s third largest beverage group owned by Mr Mirchandani. Apparently, nothing came of it.

What has surprised many market observers is that although SABMiller and Groupe Castel are in bed with each other in Africa through a cross-shareholding agreement, their managements must have decided to go their separate ways in Nigeria. Or why do they not work together more closely to fight a formidable opposition from both Heineken and Guinness?

It was only after Mr Castel had bought International Breweries that SABMiller entered the Nigerian market and bought 70 percent of Pabod Breweries in Port Harcourt.

However, once SABMiller had made the acquisition, they rolled out SABMiller’s market conquest programme without further ado. This year they are spending big money on marketing and distribution in an effort to raise Pabod’s beer and beverage output eightfold by next year.

Johan de Kok, Managing Director of SABMiller’s Nigerian unit reportedly said that it is his target to produce 250,000 hl by February 2010.

Since acquiring Pabod, SABMiller have reintroduced brands such as Grand Lager and Grand Malt. Before the end of the year, SABMiller will also introduce its Castle Milk Stout brand to better compete against Guinness.