Friday, March 15, 2013

Heineken plans to grow 20,000 tons of barley with 20,000 local farmers ,Heineken's GM for Ethiopia, Johan Doyer

Heineken's General Manager for Ethiopia, Johan Doyer
Last week, Heineken announced plans to build a 1.5m-litre capacity brewery in Ethiopia, a country that, with the second-largest population in Africa, is a major focus the Dutch brewer. Earlier this week, just-drinks spoke to Heineken's GM for Ethiopia, Johan Doyer, about the new plant, the country's rural spenders and Heineken's stiff competition.
just-drinks: What was the strategy behind the new brewery?
Johan Doyer: Heineken bought two breweries in Ethiopia (in 2011) - one in the east and one in the west. These breweries have strong positions in their home markets, but Ethiopia is a big country. So, you need capacity in the heart of the market, the center of the country. The new brewery (near Ethiopian capital Addis Ababa) will be good for our future development.

j-d: What's more important for breweries in Ethiopia? Location or capacity?
JD: It's a combination of the two. Ethiopia is a big territory: 85m people are spread out across the country. It's important to be in the urban areas, which is basically Addis Ababa, and we cover that with the new brewery. But, there are still other areas and we'll have to wait and see how the regional markets develop and how the infrastructure grows to see if we need more breweries. But, with the three breweries, we already cover the market quite well.
j-d: Will you build more breweries?
JD: I'm not saying that, but in a big market like Ethiopia then you have to look at how best to cover the market. It depends not only on the brewing location but on how infrastructure develops, urbanisation... There are many factors.

j-d: Heineken has also started a barley project with local farmers. Is it possible for you to be self-sufficient in Ethiopia?
JD: Our plan is to have 20,000 farmers grow 20,000 tonnes. The total market at the moment we estimate to be about 75,000 tonnes. About 40% of that is imported, so 20,000 tonnes produced locally is a substantial amount. Whether it is enough for our needs, that depends on how quickly the market grows, and on how we can expand this project.
j-d: What overall targets do you have? 
JD: I don't have specific targets, but if you look at the Ethiopian market over the past five years, it has doubled in size from a relatively low base. There's no reason to assume that the growth won't continue, based on the growing middle class, the country's development and political stability. That makes us very confident about the growth prospects in Ethiopia and that translates very quickly into average beer consumption per capita, which is still very low; about 4.5 litres per capita. In a country like Kenya, which is more developed, it is close to ten litres per capita.
j-d: Could Ethiopia become as important to Heineken as Nigeria (which accounts for about half of the brewer's African earnings, according to analysts)?
JD: The Nigerian market is a very big market, but who knows how the future will develop. I cannot say that Ethiopia is a potential Nigeria but it is the second-most populated country in Africa so, after Nigeria - the biggest country - it is developing fast.

j-d: What role is the emerging middle-class playing?
JD: The middle class is growing in many areas, not just in the urban areas. In the rural parts it is growing very fast. There is more and more money available in the rural areas. So, if people have access to packaged beer then they are willing to buy it.
j-d: You previously managed a brewery in South Africa that was co-owned by Diageo and Heineken. Do the brewers in Ethiopia collaborate on any projects? (Castel Group's African beer business, Brasseries & Glacieres Internationales and Diageo are the region's other big players.)
JD: No. We are all competitors in Ethiopia (laughs). There are clearly some markets where the structure of the market warrants collaboration, but in Ethiopia, the situation is different. Our major competitors all own their own facilities and there is no need for cooperation, so we are focusing on developing our brands. It's a very healthy competition, I can tell you. A very stiff competition.
http://www.just-drinks.com

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