15 December 2023

Signal Hill is building a new brewery for Strongbow in South Africa

South Africa | We heard it on the grapevine that Signal Hill Products, the holding company for South Africa’s major craft brewer Devil’s Peak, is building a large cider production plant near Johannesburg. But only insiders would have known that Signal Hill was involved in Heineken’s divestment of its Strongbow brand in South Africa.

Because when the regulators green-lighted the divestment in August, the announcement was buried among a slew of decisions by South Africa’s Competition Commission and apparently passed local media by.

In spring this year - and after a lengthy takeover process - South Africa’s regulators had okayed the acquisition of drinks group Distell by Heineken, on condition that Heineken divests of its local Strongbow business and brand to a licensee. Otherwise, Heineken would have controlled the sizeable domestic cider market (4 million hl in 2022) with brands including Strongbow, Savanna, and Hunter’s (both Distell).

A perpetual licence for Strongbow

The regulators had also stipulated that the Strongbow licence should go to a firm with a majority shareholding by “historically disadvantaged persons (HDPs)”. Moreover, the divestiture should take the form of a perpetual, royalty-free licence for South Africa, Botswana, Eswatini, Lesotho, and Namibia.

Many, including Brauwelt International, had speculated that Devil’s Peak would make an ideal buyer of the Strongbow licence, but the technical details as to how it could fulfil the regulators’ HDP conditions, were unclear.

In August, the regulators announced that the licence went to Cider House Investments, which is majority-owned by HDPs and in turn jointly controlled by Signal Hill and Livor Investments. Financial details were not disclosed. All these firms are privately owned.

A new player in cider

However, the man who would have been pulling the strings behind the scenes, is well-known. Step forward, Mark Bowman, a SABMiller veteran and its Africa chief until 2016, when SABMiller was taken over by AB-InBev.

Public documents show that Mr Bowman not only serves as a director of Signal Hill, he is also a director of Cider House, together with businessmen Trevor Theledi and Ayanda Litha Yaya. They all seem to have their fingers in many pies.

The public documents also reveal that both Cider House and Livor were set up in August 2022 already, when Heineken was still hammering out its concessions with the regulators. This suggests that the regulators were in the know about Heineken’s preferred buyer early on. It may also explain why Marco Vandeput, the brand manager for Strongbow at Signal Hill and formerly with Heineken, could join the firm in May (according to his Linkedin profile) before the official go-ahead.

Signal Hill does not keep it a secret that it has the Strongbow licence. It says so on its webpage. But all these clever moves - from the timely establishing of Cider House and Livor and the hiring of a marketing honcho, to the application of a building permit for a production plant which can handle the Strongbow volume, made sure that the divestment went smoothly and without the Nosy Parkers from the press catching wind of it.

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