The wolf at the door
What could possibly possess Namibia’s government to grant a licence to South African Breweries? For years, SAB’s applications for a bottling licence which would allow the South African brewing giant to package some of its beer in neighbouring Namibia, have been rejected by the Namibian government. This has given the country’s only brewer, Namibian Breweries, a quasi monopoly. Apparently, not for much longer.
According to reports in the Namibian media published at the end of November 2008, the government may go ahead with its plans to award a bottling licence to SABMiller’s subsidiary in the country, Castle Brewing Namibia.
No wonder that Namibian Breweries, in which Heineken and Diageo hold a stake, is up in arms. Sven Thieme, the non-executive Chairman reportedly said: "We hope the government will be responsible enough to realise that Namibia Breweries play an important role in the economy. They should look at a bigger picture and not take actions that will jeopardise the operations of the company."
Thieme praised the government for having protected both Namibia Breweries and Namibia Dairies from competition for many years. But he said the gains achieved through this protection were now at risk with the Castle Brewing licence application.
Namibian Breweries, which employs about 550 people and brews more than one million hl of beer, has enjoyed a near-monopoly at home, which allowed it to make forays into the South African beer market.
Earlier this year, Namibian Breweries in cohorts with Heineken and Diageo started building a three million hl brewery near Johannesburg which will be completed at the end of 2009 and which will allow the three partners to get their beers – Windhoek Lager, Amstel and Guinness – to the market at a much lower cost.
We will probably never find out if a deal has been struck between the South African and the Namibian governments along the lines of “if we allow Namibian breweries to build a brewery on our turf, you have to allow Castle Brewing to do the same on your turf.”
Nevertheless, there has to be some sort of agreement on the political level prior to the Namibian government giving its go-ahead to SABMiller’s plans to build a bottling plant in the country. The plant represents an investment of around NAD 135 million (EUR 10 million) and 110 jobs.
Apparently, Castle Brewing Namibia will initially control 60 percent of the plant with 40 percent going to black investors. Castle Brewing has been trying to obtain a licence for the past ten years.
