Ethiopia: Diageo Buys Meta Abo Brewery for $225 Mln

Sept 5 (The Reporter) – This week the Ethiopian beer industry added another internationally recognized company, Diageo, which acquired the state-owned Meta Brewery for USD 225 million. This brought the total Foreign Direct Investment (FDI) to the sector in Ethiopia to above half a billion dollars.

The Privatization and Public Enterprises Supervisory Agency (PPESA) floated the tender for Meta Brewery for the second time round. Encouraged by the interest shown, the agency cancelled the first tender for part-ownership of the brewery and decided to put the whole factory up for sale. Nevertheless, Diageo was the highest bidder in both occasions offering more than the other three.

According to sources close to the matter, Heineken, the owner of both Harrar and Bedele Brewery S.Cs, offered 188 million, while SAB Miller and South West Development (SWD) together bid 190 million followed by the only local brewery Dashen offering 173 million.

The technical evaluation of the bidders has not yet been completed, but Diageo, which out bided the second highest bidder by USD 35 million is already receiving congratulations from the other bidders, sources told The Reporter.

The Ethiopian beer industry is attracting prominent foreign breweries at this time. With Heineken paying USD 78 million for Harrar, USD 85 million for Bedele and another USD 100 million on expansion projects on both the plants, the total expenditure of the brewery in Ethiopian beer industry stands at USD 263 million. Nevertheless, Heineken is not alone in investing in the industry. SAB Miller, the world’s second largest brewer and SWD are also preparing to build a beer plant around Holeta Town, 40kms to west of Addis Ababa, with a cost of USD 60 million, bringing the overall total together with Diageo to USD 548 million.

With a population of 82 million, it is in Ethiopia‘s interest to lure investors in the beer sector. So far, BGI leads breweries in terms of production with a capacity of 1.7 million hectoliters in a year. Nonetheless, the production is not adequate to accommodate the growing demand in the country. According to data the four liters per capita per year consumption of Ethiopians is still one of the lowest in the world.  African countries like Nigeria and South African consume 11 and 60 liters per capita year respectively, while the average for the worlds is around 27 liters.

Diageo is the world’s largest spirits producer apart from its beer and wine brands. The company is registered in the London stock exchange and constitutes of FTSE 100 index with around 80 retailing outlets in countries around the world. It is the owner of well-known brands like Johnnie Walker Scotch whisky, Smirnoff vodka, and Guinness beer amongst others.