By: Nghiinomenwa Erastus

Just two years ago, the Namibian Competition Commission had to stop the Chinese investors from taking over the cement production sector. For this year, the Commission is again to decide on the competitiveness of beer.

Heineken announced early this year that it wants a controlling stake in Namibian Breweries. The deal includes acquiring a certain portion of another alcohol producer, marketer and distributor (spirits and ciders), Distell Namibia.

The proposed transaction involves a single, interrelated merger combining Heineken SA, NBL and certain Distell assets under a new single holding company, Newco.

The mammoth task for the Commission this time will determine if it will put maintaining competition aside to an extent to allow a formation of a dominant producer with competitive ability beyond borders, at the same time facilitating investment in the local economy.

According to the presentation by the Commission last week, if the merger gets the green light, it will create a dominant producer, marketer and distributor in beer, ciders, and spirits not just locally but in southern Africa.

The big test is the substantial prevention or lessening of competition in the relevant markets as the merger proposed acquisition or strengthening of dominant position instead of competing.

Another test assesses the merger’s technological, efficiency and innovation gain.

Namibia Breweries Limited’s presentation indicates that if the merger is allowed, NBL on its own does not possess the capability to ensure its core brands can play a bigger role beyond borders.

The brewery explained that with their ambition to penetrate more markets, a portfolio comprised predominantly of beer would not be able to cater for fast-changing consumer preferences.

The presentation explained that for the NBL’s brands like the Windhoek brand to penetrate the African and global stage requires an entity that respects and understands the value of these brands as much as the brewery itself.

The brewery highlighted that they see an opportunity to take NBL core brands into Africa and ultimately to the rest of the world through a strong global distribution network.

As such, the Heineken Group has the broadest geographic footprint of any brewer and will bring international standards, technology and innovation to the country, the NBL presentation read.

According to those involved in the assessment, the transaction creates an opportunity for Namibia to attract foreign direct investment for N$10 billion.

In the case of acquiring and localizing Distell, currently, this company has a big share of the Namibian market for cider and wine. However, none are produced here.

Distell, with a retail value of approximately N$1 billion- the merger presents an opportunity to expand manufacturing by locally producing Distell’s products (currently imported), the presentation indicated.

NBL’s presentation added that the proposed transaction/merger is about creating long-term growth, and no retrenchments are envisaged due to the transaction. 

At the same time no plans to move any production or sourcing of inputs out of Namibia, while some production, finishing and packaging will be moved to Namibia.

NBL produces, markets and distributes brands of Windhoek Lager, Tafel Lager, Windhoek Draught, and Windhoek Light) that have earned international recognition for quality and purity. 

NBL’s products are exported to 17 countries outside Namibia and South Africa.

Heineken is the second-largest global brewing entity in the world group that has a portfolio of more than 300 international, regional, local and speciality beers and ciders.

Distell supplies a range of alcoholic beverages produced in South Africa and imported into Namibia, including wines (such as Tassenberg and 4th Street), spirits (such as Klipdrift brandy), and flavoured alcoholic beverages products (such as Hunter’s and Savanna ciders). 

Email: erastus@thevillager.com.na