East African Breweries (EABL), biggest brewery in Kenya and subsidiary of spirit maker Diageo has spent USD 3 million to acquire an additional four percent stake in Tanzania’s second largest brewery Serengeti Breweries (SBL).
The deal was already completed in July last year following the approval from Tanzania’s Fair Competition Commission but not revealed until now by EABL’s parent company Diageo. “On 29 July, 2019, EABL completed a purchase of four percent of the share capital of Serengeti Breweries Limited for $3 million,” Diageo said in its results for the six months ended December.
SBL was incorporated in 1988 as Associated Breweries and changed its name to Serengeti Breweries Limited in 2002. SBL's headquarters are in Dar Es Salaam, Tanzania. The previous owners and management of SBL acquired the company in 2002 and commenced on a strategy of rapid expansion which has resulted in outstanding growth.
EABL acquired 51% of the issued share capital of SBL in October 2010. With the newly acquired 4% EABL owns at least 55% of the outstanding shares of SBL. However, it could be up to 76.5% now depending on the treatment of KSH15.3 billion (USD 153 million) that EABL lent to Serengeti to ease the Tanzanian company’s debt burden. In addition, the pace at which minority investors in the subsidiary can provide their share of capital has also an influence on EABL’s share in SBL.
At present, SBL has three operating plants spread out across the country; the Dar Es Salaam plant has a production capacity of 350,000 hl, the Mwanza plant a capacity of 650,000 hl while the state-of-the-art brewery in Moshi which was commissioned in January 2012 has a production capacity of 500,000 hl expandable to 800,000 HL.
SBL accounts for 15% of the market by volume and when combined with EABL's portfolio, accounts for approximately 28% of the Tanzanian branded beer sector. Market leader is AB InBev with its subsidiary Tanzania Breweries, located in Tanzania’s commercial capital Dar es Salaam. In March 2018, AB InBev announced to invest USD 100 million in a new brewery in Dodoma, Tanzania’s capital (inside.beer, 20.3.2018).