Al Ahram Beverages, the only brewer in Egypt, is set to be the latest addition to the growing portfolio of Dutch brewer Heineken. The North African firm, known as ABC, is to be acquired by Heineken for a total of $287 million (€292m).
With volumes of 430,000 hectolitres, ABC will be a significant acquisition for Heineken, especially given its dominant position in the local market. The European group said that ABC's Stella brand was almost "synonymous with beer" in Egypt, and that the group was also the market leader in non-alcoholic drinks with its Fayrouz brand of malt drink. ABC in fact produces more non-alcoholic drinks - 620,000hl - than it does beer.
ABC also owns wineries producing the brands Gianaclis and Obelisque, brands which account for 85 per cent of the wine drunk in Egypt, and has a significant spirits business to boot. Total sales in 201 reached $105 million, with just over half of this coming from beer, 29 per cent from non-alcoholic malt beverages, 11 per cent from spirits and wine and 8 per cent from soft drinks.
Heineken said it would finance the transaction from its own resources, and that it expected ABC to be immediately beneficial to its profits. The deal will also give the Dutch group a significant foothold in a major emerging market.
Heineken has perhaps fallen someway behind its main European rival Interbrew in the last few years, at least in terms of high profile acquisitions. While ABC is not exactly in the same league as, say, Whitbread or Bass in the UK, both of which were thought to be targets for Heineken at one stage but which were eventually bought by Interbrew, the Egyptian group is a strong player and will undoubtedly give Heineken an important position in the African market. But the market will watch with interest to see where the Dutch group goes next on the acquisition trail, with China, Russia and Latin America - not exactly the easiest markets in which to do business - all expected to feature heavily in the expansion programme.
Heineken has also announced an 11 per cent rise in first half profits despite poor summer weather in core European markets. First half net profits reached €330 million, and the company said that full year net profit growth would be around the same level despite lower volumes caused by the bad weather in Europe, large parts of which have been underwater for much of the summer. Overall volume sales were 12 per cent higher than the previous year, however, at 41.5 million hl.
First-half operating profit rose to €581 million on the back of sales up 11 per cent to €4.95 billion. First time contributions from Russian unit Bravo Holding and the BrauHolding International business (a joint venture with Germany's Karlsberg) helped lift profits during the half, but there was also solid organic growth of 6 per cent.
The company said that worldwide sales of Heineken beer in the premium segment were 6 per cent higher at 8.8 million hl, with the US, Spain, Poland, Singapore and Thailand accounting for most of this growth. Total sales of Heineken beer increased from 11 million hl to 11.4 million hl, a 4 per cent increase.
Sales of the group's second brand, Amstel, remained unchanged at 5.1 million hl, with higher sales in the US and Africa offsetting a decline Europe, but there was a strong showing from the speciality beer brands such as Desperados and Affligem, which contributed to a 13 per cent rise to 591,000hl.