Heineken sparks beer war with $160 million brewery in Ivory Coast

On May 10, 2017

(CNN)Dutch beer giant Heineken has made an ambitious play for the fast-growing Ivorian beer market.

The world’s second largest brewer has inaugurated a new $160 million state-of-the-art plant on the outskirts of the economic capital Abidjan, in partnership with distribution specialist CFAO.

The new brewery, named “Brassivoire,” employs 200 staff and has capacity to produce 160 million liters of beer per year. Both figures are likely to rise, as Heineken sees the Ivory Coast as a market with great potential.

“It has a young population, a high rate of urbanization – almost 50% already – a dynamic economy and there is only one player so far,” says Heineken CEO Jean-Francois Van Boxmeer.

A worker oversees the bottle filling line at the Brassivoire beer factory in Abidjan.

First for thirst?

The existing market leader in the Ivory Coast is French company Groupe Castel.

The company enjoys a near monopoly on the 270 million liters of beer consumed annually in the West African state, with popular brands including Castel, Flag and Solibra.

But Heineken believes its new Ivoire beer can eat into Castel’s market share, with a relatively low price of 500 Francs ($0.81) per 60 centiliter bottle, and a product designed for local consumers.

“We researched for years,” says Brassivoire General Manager Alexander Koch. “We developed the bottle, the name, the color code, even the recipe together with the Ivorian consumer.”

The new beer has performed well so far, he says, and production will soon increase.

“The Ivoire brand has had an incredibly good reception (from) the Ivorian consumer,” says Koch. “We are currently running at full capacity and will bring forward some of our investments to meet demand.”

The brewery will produce Heineken’s new ‘Ivoire’ beer – developed for local tastes.

Hearts and minds

Heineken may have an advantage over Castel through its relationships with local partners.

The inauguration of the new brewery in an industrial zone in outer Abidjan was attended by Vice-President Daniel Kablan Duncan, Prime Minister Amadou Gon Coulibaly, and Minister of Industry and Mines Jean-Claude Brou.

“This will contribute to the economic emergence of the Ivory Coast,” said Duncan at the launch. “Eventually, this brewery will generate 700 direct jobs and 40,000 indirect jobs.”

Heineken is committed to using local suppliers and supporting the development of local agriculture, Duncan added.

This approach marks a contrast with Groupe Castel, according to Pierre Chaumont, a beverage market specialist at Sagaci Research and former sales manager at Castel.

“Heineken is a big international company with a good approach to doing business in emerging markets,” says Chaumont. “They are not just providing employment, they are keen to work with local communities…A family group like Castel is not so involved.”

The Ivorian market has been dominated by French company Castel Groupe, which owns brands including Solibra, Flag and Castel.

Race to the bottle

National and regional trends suggest that there are sound reasons for Heineken’s investment.

Africa is by far the fastest growing region for beer consumption, according to research group Global Data (previously Canadean), which found over 5% annual growth compared with 3% for Asia and less than 1% for Western Europe.

The Ivory Coast is one of the continent’s most dynamic economies, with annual growth of over 8%, and the beer market is also expected to expand.

“There is untapped potential,” says Global Data analyst Andrew Curran. “The Ivory Coast is outside the top 10 beer consuming countries in Africa, but it is showing more or less matching growth rates (to the top 10).”

The Ivory Coast has also gained importance since the recent merger between rivals SAB Miller and InBev, says Curran, which has consolidated their dominance in South Africa and forced Heineken to focus on the francophone West.

Success in the Ivory Coast could lead to further gains in the region, such as in Burkina Faso and Benin, he believes.

The battle for Ivorian drinkers is underway, and the stakes are high.

Bar in the Marcory quarter of Abidjan.