Heineken partners with Efes
Is a new European brewing giant waiting in wings? On 28 January 2008, Heineken announced that it has established a joint venture with Efes Breweries International.
Whoever came up with the idea and whoever pushed it – there is no doubt that Heineken combining its operations with Efes Brewing International (EBI) in several central Asian markets and in Serbia makes plenty of sense when it comes to using capital, personnel and expertise more efficiently. After all, in these markets Heineken and EBI are up against some formidable competitors. BBH regards the former Soviet Republics of central Asia as its “home turf” and has already made that quite clear, while in Serbia InBev and Carlsberg have done their best to hamper EBI’s growth.
According to Heineken’s press release, the first market to be targeted will be Uzbekistan, where BBH recently opened a brewery (we reported). Heineken and EBI plan to enter the market through the acquisition of breweries. Under the terms of the agreement, Heineken and EBI will hold 40 percent and 60 percent of the shares in the joint venture, respectively, with EBI responsible for operational management.
Uzbekistan has an estimated population of 27 million, a beer market showing double-digit growth and current estimated per capita beer consumption of 11 litres.
In a next move, Heineken and EBI will combine their operations in the Kazakh and Serbian beer markets. Both of these transactions will be subject to the customary regulatory approvals and are expected to be completed in the first half of 2008.
In Kazakhstan, EBI is the second largest brewer – behind BBH - with a 25 percent market share. The company operates two breweries, one in the mining district of Karaganda in the north and one in Almaty in the south. The total annual capacity is 2.1 million hl. Heineken is the fifth largest brewer in the market with a 5 percent market share and an annual capacity of 400,000 hl. Following the completion of the proposed transaction, Heineken and EBI would hold 28 percent and 72 percent respectively of the combined Kazakh business.
In Serbia, EBI is the third largest brewer in the market with 10 percent market share. The company operates two breweries with a total annual capacity of 1.4 million hl On 5 December 2007, Heineken announced that it intends to acquire the Rodic Brewery in Serbia, the country’s fourth largest brewer with a 7 percent market share and an annual capacity of 1.5 million hl. Following the completion of the proposed transaction with EBI, Heineken and EBI would hold 72 percent and 28 percent respectively of the combined Serbian business.
The businesses of EBI not covered by the joint venture are in Russia and Moldova. EBI is a majority owned subsidiary of Anadolu Efes, the leading beverage company in Turkey. Anadolu Efes, together with its direct and indirect subsidiaries and affiliates, produces, markets and sells beer, malt, soft drinks and bottled water across Turkey, Southeast Europe, Russia, the CIS countries and the Middle East.
