Drinks giant Diageo plans to brew its Guinness stout in South Africa, as the beverage group's new joint venture brewery in the country helps it step up efforts to take on SABMiller in its home market.
The new brewery at Sedibeng, south of Johannesburg, built by Diageo and Heineken, started brewing its first Amstel and Windhoek beers late last year. As well as Guinness, Heineken's Strongbow cider will also be brewed there.
'We want to start brewing Guinness but we still need to build the Guinness brand (in particular) among the locals before we do that,' Diageo's Africa region managing director Nick Blazquez said.
The greenfield brewery cost the 75:25 Heineken-Diageo venture €308m to build; it also produces Diageo's spirit cooler products such as Smirnoff Spin.
The brewery is expected to produce 4 million hectolitres by year-end and eventually up 6 million hectolitres.
Heineken's chance to expand in South Africa came in April 2007 when it won back the rights from SABMiller to brew and distribute its Amstel brand in the country, and Heineken linked with Diageo and Windhoek-based Namibia Breweries to market a range of their beers and other products in South Africa.
Africa generates around 10% of Diageo's profits and some 40% of that comes from South Africa, largely through the sale of spirit drinks like J&B whisky. South Africa also accounts for almost a third of Africa's beer consumption.
