Ethiopia: Groupe Castel buys second brewery within 2 months

Groupe Castel, French based group, which ranks number 3 in wine and number 10 in beer worldwide, has notfied the Competition Commission of COMESA, the Common Market for Eastern and Southern Africa, that it is willing to buy through its holding company B.I.H. Brasseries Internationales Holding (BIH) 100% of  Cepar, a limited liability company incorporated in Mauritius.

Cepar in turn holds a 58 percent stake in Zebidar Brewery in Ethiopia. The brewery was established as a greenfield brewery  in 2014 and started operations in 2016 with an initial capacity of 350,000 hl per annum. Right from the start it was intended to increase the capacity of Zebidar Brewery to 650,000 hl within 5 years’ time. The brewery is located in the localities of Gubre, 167 km south west of Addis Ababa.

Seller of the 58% stake is Unibra, a Belgium based company operating in the African drinks market. It was created by Michel Relecom in 1960 through the merger of four breweries in what is now the Democratic Republic of the Congo. The company, which holds the rights for the Skol beer brand in Africa operates in six countries.

The remaining roughly 40% in the brewery will stay with Jemar Hulugeb Industry, a local group with more than 2,000 shareholders.

Since its privatization, the Ethiopian beer industry has attracted a lot of foreign money. Heineken and Diageo entered the Ethiopian market back in 2011 following the acquisition of old and tittering state-owned breweries in the country.

Diageo invested $ 225 million on Meta Brewery, a state-owned factory placed in the auction block under the privatization policy.

In August 2011 Heineken completed the purchase of formerly state-owned Bedele and Harar Breweries in Ethiopia for a combined sum of $163 million. In January 2015 Heineken officially inaugurated another €110 million brewery in Ethiopia in Kilinto outside of Addis Ababa with a production capacity of 1.5 million hectoliters, thus making Heineken the leading brewer in Ethiopia with about 4 million hectoliters ahead of BGI Castel (2.7 million hectoliters) Diageo  (1.7 million hectoliters) and several smaller mostly locally owned competitors. Currently Heineken is bringing up the total capacity of its group to 5 million hl.

BGI entered the Ethiopian market in 1998. Before the privatization BGi had a market share of about 70 percent., which has continuously eroded in the last years. Until recently BGI owned three breweries including St. George Brewery in Addis Ababa, Kombolcha Brewery and The Hawassa Brewery with a combined production capacity of 3.6 million hectoliters of bottled and draft beer annually. BGI Ethiopia also owns and operates the Castel Winery and vineyard located in the town of Ziway,

In February 2018 BGI Ethiopia agreed to buy a 58 percent stake in Raya Brewery, at a total cost of 2.5 billion birr ($91 million).  Raya is the second largest brewery in northern Ethiopia with a capacity of 700.000 hl next to Dashen, which is co-owned by Vasari Global, UK-based asset management firm Duet Group, and the TIRET Group, an Ethiopian endowment fund.

With a population of 95 million, Ethiopia is Africa’s second most populous country with one of the fastest rates of urbanization in the world. “The domestic market is rising from 15 to 20 percent in every year. We are the real witnesses of Ethiopian rapid growth in the previous decade which has allowed us secure a strong market in the country”, said Isayas Hadera, Marketing Manager of BGI Ethiopia Brewery Company already about one year ago.

Currently, Ethiopia’s total beer consumption stands at 12 million hectoliters per year, with a lot of potential to grow since per capita consumption amounts to only 9 liters per head and year.

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