LONDON (AP) — British drinks producer Diageo PLC and Dutch brewer Heineken SA said Friday they had agreed to form a new joint venture to build a brewery and bottling plant in South Africa, challenging the dominance of SABMiller PLC.
Diageo, which makes Guinness stout, Johnnie Walker whiskey and Smirnoff vodka, and Heineken, which brews both its namesake and Amstel beers, said they planned to build the brewery in the Gauteng province around Johannesburg as part of the Supplyco joint venture.
The brewery will be 75 percent owned by Heineken and 25 percent owned by Diageo.
In a second joint venture, Diageo and Heineken will team up with Namibia Breweries Ltd. to combine their beer, cider and ready-to-drink businesses in South Africa, extending their existing cost-sharing venture.
Diageo and Heineken will each own 42.25 percent of the venture, to be called DHN Drinks, and NBL will own 15.5 percent. The existing venture, Brandhouse Beverages will continue to market and distribute the parties' products in South Africa.
Diageo's push into South Africa comes after SABMiller last year lost its contract to make Amstel lager in the country.
''We have already demonstrated that a combined beverage alcohol distribution company can capitalize on the growth opportunities in markets such as South Africa and the new structure will enable us to realize further growth opportunities as a result of the strong platform we will create together,'' said Nick Blazquez, managing director of Diageo Africa.
''With Africa now Heineken's fastest growing region, with the Heineken brand growing 70 percent in South Africa and Amstel very clearly still a favorite with South African consumers, there is no better time to invest in growth,'' said Tom de Man, Heinekens regional president of Africa and the Middle East.
Diageo said it will invest 100 million pounds (US$201.6 million; €130.8 million) in DHN Drinks and Supplyco in the first two years.