Not satisfied with already being the world’s second largest brewery, Heineken has recently begun searching out new markets in an attempt to offset the impact of increased competition in the US and Europe. As part of this, Heineken recently opened a new $160 million brewery in the Ivory Coast in an attempt to capture this suddenly burgeoning market. The new Brassivoire brewery, a joint venture with African company CFAO SA, will put Heineken into direct competition with current market leader Groupe Castel—producer of Solibra Bock and Flag, the two most popular brands of beer in the Ivory Coast. However, while Heineken is putting its experience and money into the project, the company isn’t technically putting its name behind the new venture—at least not yet.
Instead of producing Heineken beer, the new brewery is currently producing Ivoire lager. Depending on the success of the venture, there are plans to eventually add other brands to the lineup at some point in the future. It wasn’t all that long ago that the idea of any major international company moving to Ivory Coast would have been laughable. After all, this is a country that suffered under more than a decade of conflict, instability and political infighting. However, things have been looking up for the country ever since 2011.
With average yearly economic growth rates hovering around 9 percent for the past five years, Ivory Coast is now Africa’s fastest growing economy, which is suddenly beginning to make it a much more attractive destination for investors. However, another major factor in Heineken’s decision to open the new brewery lies in the low competition. Despite the relative success that Castel has experienced, per-capita beer consumption in the Ivory Coast is still less than a third of what it is in neighboring countries like Cameroon. The economy definitely plays a role in this, which is why Heineken is banking that the rate of beer consumption will continue to grow as long as the economy continues to do so.
By getting in to the market at a time where there is really only one major competitor, Heineken obviously hopes that it can help be responsible for and benefit from this growth. Of course, all of this depends on the current stability within the country being maintained. In fact, the company already knows full well what can happen when a once stable and fairly prosperous country begins backsliding as it only needs to look at the rapidly declining profits of its Nigerian Breweries PLC to understand the potential risks. Maintaining political stability in the Ivory Coast will be key for the new venture’s success. However, as long as the country continues along its current path, more and more international companies will likely be attracted to invest and thus continue to further economic growth. In fact, Heineken’s new venture alone is expected to bring with it some major benefits for the local economy.
Located just outside the financial capital of Abidjan, the brewery has already resulted in the creation of 200 local jobs. As well, Ivoire is brewed using rice in addition to malted barley, which should directly have a positive impact on the country’s rice growing industry. Only time will tell whether the new Heineken Ivory Coast brewery will be as successful as the company hopes. However, judging by the company’s history, one would be foolish to write the venture off just yet.