Ethiopia: Heineken challenged by new brewery of former partner

Kangaroo Plast (KP), a family owned business group with diverse interests located in Addis Ababa, Ethiopia, will open one of the largest breweries in Ethiopia next month, New Business Ethiopia reported on Tuesday. The project called United Beverages Share Company was realized in association with United Africa Beverages, a Mauritius based beer maker an international investment company for the franchise, production, and distribution of global beer brands. The new plant has a capacity to bottle 1.6 million hectoliters and to manufacture 800,000 units of packing materials per year. The 1.5 billion birr (USD 53.1 million) investment in Modjo, a town in central Ethiopia, 80km south-west of Addis Abeba, will intensify the competition with former partner Heineken which operates since 2015 a 1.5 million hectoliter brewery in nearby Kilinto.

In 2007, when beer business in Ethiopia was still dominated by several state-owned breweries, KP started construction of a new brewery with a capacity of 300,000 hectoliters in Modjo, 80 km south-west of Addis Abeba. In 2009 the company approached Heineken and both companies agreed on a close cooperation for the distribution with KP being the major local distributor of Heineken beer in Ethiopia. In 2010 both companies agreed to cooperate in the construction of KP’s brewery.

The distribution agreement as well as the common work on the new brewery ended in 2011, when Heineken acquired the two state-owned breweries Harar and Bedele for USD163.4 million.

In the following years Heineken modernized the old breweries and build a new 1.5 million hectoliter brewery in Kilinto, close to Modjo, the place where KP had stopped building its own brewery. Heineken also started producing the Walia brand in its new Kilinto brewery, a beer brand that was registered in 2011 by KP with the Ethiopian Intellectual Property Office (EIPO) for the later use in the new brewery. Walia Ibex is a coveted name since it describes an endangered animal only found in northern Ethiopia in the Simien Mountain National Park.

Three years later, Heineken also applied for Walia as a trademark, which was rejected by the EIPO. However, Heineken contested the decision, saying that the brand was not in use by KP and the KP’s trademark was invalid due to non-use. The EIPO agreed with the arguments and awarded Heineken the trademark. This time KP contested the decision and claimed that the delay that allowed its trademark to lapse was caused by a fire and beyond its control, a legal term known as force majeure. But since the fire did not occur at the brewery under construction but at Kangaroo’s foam factory, the EIPO rejected the objection.

KP finally took the case to the High Court in 2015 and finally won, arguing that the Force majeure defense was valid, as the brewery was to be made using the revenue from the foam factory. Heineken then appealed to the Supreme Court and was allowed to use the brand name while the case was in litigation. Up to today, Walia is one of the bestselling brands in Heineken’s portfolio in Ethiopia.

Kangaroo Plast Group is one of the eight subsidiaries of Kangaroo Industrial Group founded by Yirga Haile and family. The family conglomerate is involved in a number of different sectors with Universal Foods, Enyi Ethiopia Rose, Enyi Construction, 3F Furniture, Kangaroo Foam and Palm Ethiopia all under its umbrella.

KP’s new brewery was built on 25 hectares of land by “holistic systems engineering” company Krones from Germany. “The company has solely done all the manufacturing and installation of the machines from A to Z,” said Ephrem Yirga Haile, Board Chairman of United Beverages and Kangaroo Plast. Krones opened an office in Addis Abbeba, Ethiopia, in 2018 to serve its local customers base which was served before from its office in Kenia. Besides that the company has offices in Angola, Nigeria and South Africa, where Krones has trained local staff members in its training facilities.

Belachew Yirga Haile was the primary advocate of the new brewery project. When he died three years ago in a motor accident his younger brother Ephraim Yirga Haile took over and finished the project. “I am delighted to complete what my brother has started,” he said.

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