EABL aims to acquire stake in TZ brewer

East African Breweries Limited aims to acquire a stake in Tanzanian brewer, Serengeti Breweries, this year after settling a dispute with rival SABMiller over the East African nation’s beer market.

“The acquisition of this interest is subject to certain conditions, including regulatory and EABL shareholder consent, and is expected to complete during 2010,” EABL’s government affairs director, Brenda Mbathi, said.

The Kenyan brewer, majority-owned by Britain’s Diageo, sparked a row with SABMiller last year when it sought to buy a stake in Serengeti and end a manufacturing and distribution agreement with Tanzania Breweries Limited, a SABMiller subsidiary in which EABL holds a stake.

The move to buy the stake in Serengeti Breweries was blocked after SABMiller was granted an injunction in the London High Court, but EABL said on Thursday it had now reached a settlement of the dispute.

Grow earnings

SABMiller owns 52.8 per cent of Tanzania Breweries, while EABL holds 20 per cent and the rest is held by Tanzanian pension funds and the public through the Dar es Salaam Stock Exchange (DSE).

Serengeti Breweries Limited is owned by a group of private investors.

“In the last five years SBL has grown its own brands by 10 per cent, an indication of the growth opportunities available to both SBL and EABL brands when brewed and distributed together by SBL in Tanzania,” Mbathi said.

The battle for control of the regional beer market pitting SABMiller and Diageo is set to intensify as they seek to grow earnings in emerging countries due to falling beer volumes in key North American and European markets.

SABMiller notes in its 2009 annual report that growth in beer consumption in Africa was the second highest after Asia, with a compounded annual growth rate of 6.4 per cent over the past five years compared to Asia’s 8.4 per cent.

North America had modest growth at a 0.5 per cent while the compounded growth in Europe was negative.

Similar sentiments were expressed by Diageo.

EABL, which is leading Diageo’s onslaught in the Eastern Africa market, plans to reinforce its presence in Ethiopia, the Great Lakes region and Southern Sudan.

At present, Tanzania appears to be at the top EABL’s regional expansion agenda, going with its planned acquisition of Serengeti Breweries.