Could SAB start brewing Guinness in South Africa?
If, within the next three years, South Africans take a liking to Guinness, SAB could be forced to start brewing it locally under the terms of the new deal.
According to a report in the South African Business Insider there, one of the conditions signed into the recent distribution agreement is that should a threshold of Guinness sales be reached, SAB, a subsidiary of AB InBev, will have to brew Guinness locally. According to the report,
While the threshold in question is not public knowledge South Africa would have to really take to the dark stout, consuming what Business Insider South Africa understands to be the equivalent of more than 4.5 million cans of Guinness every year for that provision to kick-in.
However, according to Diageo South Africa it’s entering into an agreement with Amalgamated Beverage Industries SA (the soft drinks arm of SAB).
“This agreement will see ABI producing, distributing and marketing Diageo’s Ready to Drink portfolio in the country and Guinness Stout,” it stated, “It represents the next chapter in the development of our many well-established RTDs as well as the beginning of a chapter for Guinness in SA which will now be sold through a dedicated beer route to market.
“Diageo South Africa’s strategic intent remains centred on its leading spirits portfolio where, as market leaders, we are working to increase spirits share with brands across all categories.”
It’s understood that as SAB’s distribution of it develops and Diageo sees how demand develops, local production would be considered.
No Guinness is produced in South Africa currently. It is produced elsewhere in Africa, mainly in Nigeria, the first Guinness brewery to be established outside the UK and Ireland (in 1962).
Diageo itself described Guinness there as “still a very small premium stout brand” where it takes up under 1% of the total beer market.
Guinness stout is only brewed in Dublin but SAB recently won approval from the Competition Tribunal to take over local distribution of some products made by competitor Diageo including Smirnoff-branded flavoured drinks and Guinness, reports the SA Business Insider.
SAB has an enviable distribution network there and the deal would see Guinness being stocked in more bars than ever.
