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Corporate

Heineken defends termination of 3 EA distributors’ contracts in suit

Beer maker Heineken has defended its decision to terminate contracts for three firms that it had hired to distribute its products across East Africa (EA), arguing that it acted within terms of their agreement.

The Dutch brewer says in a response to a suit filed by its Kenya, Uganda and Tanzania distributors that the deals struck with the three firms allowed it to terminate the agreements without having to make any explanations.

Heineken says the termination is aimed at deleting the exclusivity clause in the current contracts to open up the distribution of its products across the region to more firms that are willing to partner with it.

Maxam Limited, Uganda’s Modern Lane Limited and Tanzania’s Olepasu Limited last week obtained a court order stopping Heineken from terminating their distribution deals after they claimed the move was ill motivated.

Heineken however says that the three firms were free to apply for new distribution deals.

“Heineken’s representatives informed the plaintiffs’ representatives that the defendant is looking at terminating the exclusivity of the Kenya agreement. Heineken in addition made the plaintiffs aware that despite having the intention to terminate the exclusivity of the Kenya agreement they were still eligible to enter into another distribution agreement with Heineken,” says the Dutch brewer.

Maxam, Modern Lane and Olepasu have also faulted Heineken for sending termination letters through its parent company, Heineken International BV, arguing the distribution deals were signed with a sister company--Heineken East Africa Import Company (HEAIC).

But Heineken has accused the three of seeking to apply double standards, as they recognised the parent firm when accepting the distribution deals between 2012 and 2014.

Heineken sent termination notices to the three distributors last month. They have sued Heineken International BV and its subsidiaries Heineken East Africa Import Company and Heineken Brouwerjen BV.

The three distributors in their suit argue that Heineken wants to terminate their contracts despite their efforts to grow the brewer’s turnover to Sh1.8 billion in 2015 up from Sh1.3 billion a year earlier.

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