Ethiopia: Suit for Heineken’s unfair trade practices dismissed

Ethiopian Trade Practices & Consumer Protection Authority’s tribunal has dismissed a suit instigated by Meta Abo Brewery , a subsidiary of Diageo, against Heineken Breweries, after both sides failed to appear before the tribunal.

In June Meta filled its pleading claiming that Heineken intentionally hoarded Meta’s bottles and crates from October 2016 to April 2017 in order to sabotage Meta’s competitiveness. Meta claimed to have suffered 9 million Birr ($385,000) loss. Heineken was summoned by the court to present its statement of defense by July 27, 2017 but failed to do so and failed to appear on the adjourned hearing. For a second hearing on August 11, 2017 both sides failed to appear. Accordingly, the tribunal dismissed the suit as per the Civil Procedure Code of Ethiopia.

In 2011/2012, Ethiopia started privatizing its national brewing industry.  Heineken was successful in buying Bedele and Harar breweries for $163.4 million while Diageo bought Meta Abo for $225 million. Since then both companies are fighting hard for the 96 million actual and future beer drinkers (almost 44% of the population is in the 0-14 age group) of the landlocked country in the horn of Africa.

Last year Heineken doubled the capacity of the Kilinto plant, in the southern outskirt of Addis Ababa and announced to boost the total production of all three plants including Bedele and Harar to four million hectoliters a year giving the company the highest beer production capacity in Ethiopia.

Despite significant investments in the last years’ Diageo production capacity only amounts to 1.7 million hectoliters.

Currently Ethiopia is home for 11 brewing plants operated by 7 breweries with an annual production capacity of 12 million hectoliters.  Next to Heineken and Diageo there are also BGI Castel, Dashen, Habesha, Raya and Zebidar.

Second biggest brewer in Ethipoia following Heineken is BGI Castel with three brewing sites in Addis Ababa, Kombolcha, Hawassa with a total capacity of 2.7 million hectoliters of beer annually. Additional the company is running a Castel Winery in Ziway, 163 km south of Addis Abeba.

Follwing Diageo as the third biggest brewery follows Dashen Brewery. The company was established in 2000 by Tiret Corporate, an endowment organization with the assets that were in the hands of the Amhara National Democratic Movement (ANDM) after the fall of the Derg regime. In 2012, 51% of the company’s shares were sold to Duet, a UK based investment company. Dashen operates two breweries in Gonder in northwest Ethiopia and in Debre Birhan, 120 km northeast of Addis Ababa.

Raya Brewery, which was established by private local investors in 2010, has started production at the end of 2014 in the Bohera Mountains, 667 km north of Addis Abeba . The brewery had an initial capacity of 600,000 hectolitres, which was later increased to 750,000 hectoliters. Further plans included an additional extension to 1.3 million hectoliters.  Last year Raya registered a loss of 104 million Birr ($.4m), which is 32 million Birr ($1.36m) higher than the previous year.

In May 2017 Habesha Brewery, which was established in the same year Raya Brewery and which is 70% owned by Bavaria Holland, announced to initiate an investment program of about 1 billion Birr ($42.8m) to nearly double the current capacity in Debre Berhan, 130 km north of Addis Abeba and close to the new Dashen brewery, to 700,000 hectoliters to be operational in the first half of the coming year.

The latest entrant to the Ethiopian beer industry is Zebidar Brewery with a production in Gubre, 167km south west of Addis Ababa. The brewery, in which Belgian Unibar holds a 60% majority share, has invested 1.2 billion ($5.13m) birr to build up an initial production capacity of 350,000 hectoliters, which has started production earlier this year.

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