South Africa: Heineken to step up investments in brands with ‘greatest long-term growth opportunities’

Amstel owner Heineken plans to step up investment in brands that carry the greatest long-term growth opportunities, including "notable increases" in marketing and sales in South Africa and other emerging markets, Az.com reported on July 31.

The Dutch-brewing giant has recently faced some pressure in terms of sale volumes in South Africa, but CEO Dolf van den Brink also told an investor conference call on July 29 that the company's local wine, Distell spirits, cider, and ready-to-drink portfolio outperformed the market in their respective categories.

This includes momentum behind the Savanna and Bernini brands, though he conceded that Heineken has "more work to do in the beer segment" in South Africa.

Van den Brink did not specify what this work on the group's beer portfolio entailed, but it is confident about reaching a target of €500 million for its 2024 year to end-December and will "reinvest a larger proportion of these savings into marketing and sales."

In February, when it released full-year results for its 2023 year, Heineken announced it was writing down its South Africa business by €491 million (about R10 billion), or 16%, under pressure from rising interest rates and volume declines.

It said at the time the lower current valuation of the business, relative to the time of the announcement of the acquisition in November 2021, predominantly reflected the increase in the weighted average cost of capital.

The world's second-largest brewer only completed its tie-up of its local operations with Distell in April 2023, which brought along brands such as Amarula, Klipdrift, and Nederburg.

It also came in for some criticism about its performance locally by Johann Rupert's investment group Remgro, which owns 18.8% of Heineken in SA, following the takeover.

31 July, 2024