Castel’s beer monopoly will be broken up by new Heineken joint-venture

Having enjoyed a beer market monopoly for years, France’s Pierre Castel now faces competition from Heineken which plans to open a brewery in 2008.

Tunisia, the small North African country, mainly known as a “bon prix” tourist destination, has been a long-time Castel market per excellence: Pierre Castel or rather his Société Frigorifique et Brasserie de Tunis, has owned the country’s sole brewery, which produced an estimated one million hl of beer, and enjoyed the benefits of a Coca-Cola bottling licence too. Whatever beverages you bought in Tunisia, chances were high that the octogenarian entrepreneur Pierre Castel would profit from it.

In view of the general trend towards market consolidation, there seems to be nothing wrong with a monopoly - unless you happen to be a consumer or an international brewer who wakes up one morning only to realise that his local partner also peddles his competitor’s beers. That must have happened to Heineken. Because in June 2004 the Dutch had struck a deal with Castel in Tunisia which allowed Castel to brew Heineken under licence. However, only a few months later Castel struck a deal with Scottish & Newcastle which permitted Castel to also distribute all the Kronenbourg brands.

Guess who was miffed?

The brewing industry in Tunisia must be a profitable business because Heineken has now partnered with a local investor to found a joint-venture and a brewery in Tunisia. Heineken announced the acquisition of 49.99 percent of the shares in the Tunisian company, Société de Production et de Distribution des Boissons S.A. (SPDB). The other shares are held by a “Mr Boujbel” a local businessman, whose interests range from hotel operations to agribusiness. Apparently, there are at least three different “Mr Boujbel”, as the French newspaper Le Figaro noted in smart-assed fashion upon hearing of the joint-venture.

Well, does it matter which “Mr Boujbel” signed the papers? This is Northern Africa, so all three Boujbels will be related.

As Heineken said, the joint-venture company will invest in the construction of a new brewery and will brew and distribute Heineken and local brands in Tunisia. The total initial investment is EUR 27 million, financed through both debt and equity. Heineken’s share of the equity stake corresponds to approximately EUR 6 million.

The new 200 000 hl brewery will be built in Grombalia, 30 km from Tunis and will start production in early 2008.

According to Heineken, the Tunisian beer market is growing and is currently estimated at 1 million hl. Thanks to more than 6 million tourists each year (official figure for 2005), per capita consumption of beer is 10 litres, the second highest in the region after Turkey.