South Africa: Heineken N.V. regains Amstel brand in South Africa and announces new brewery

Heineken N.V. announced on March 12 that with immediate effect its subsidiary Amstel Brouwerij (“Amstel”) has exercised its right to terminate the contract with South African Breweries for the production, marketing, sale and distribution of Amstel Lager in Southern Africa. This follows an arbitration award by the International Court of Arbitration of the International Chamber of Commerce in favour of Amstel.

In addition, Heineken also announced that it has taken an in-principle decision to construct a brewery in South Africa.

Amstel Lager will be marketed, sold and distributed in South Africa through Brandhouse Beverages (Pty) Ltd., the Cape Town headquartered joint venture between Heineken, Diageo and Namibia Breweries. Until the new brewery is complete, the production of Amstel Lager will be sourced from existing Amstel breweries in Europe.

Tom de Man, Regional President Africa and the Middle East of Heineken N.V., commented, “Regaining the Amstel brand is an important development for both the Heineken and Brandhouse businesses. It allows us to further strengthen the existing Brandhouse portfolio and it represents a significant step in building our business in this profitable beer market.”

Brandhouse Managing Director, Simon Litherland, commented, "We are delighted with Heineken's announcement and the developments around Amstel. Amstel will be a fantastic addition to our premium brand portfolio and will bring significant scale to our existing beer business".

Amstel Lager is positioned in the premium segment of the South African market and has an 8% market share. In 2006, the premium segment grew above 20%, whilst the total South African beer market grew at 1%.
Amstel initiated the arbitration in 2006 following its conclusion that the acquisition by BevCo LLC of a 15.04% shareholding in SABMiller resulted in a material change in ownership of SABMiller which Amstel reasonably considered to be harmful to the interests of the Heineken Group. Consequently, under the terms of the contract, Amstel became entitled to terminate the agreement.

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