Olivier van Beemen - Heineken in Africa: A Multinational Unleashed

HEINEKEN IN AFRICA

First published in the United Kingdom in 2019

By C. Hurst & Co. (Publishers) Ltd.,

41 Great Russell Street, London, WC1B 3PL

Copyright 2018 by Olivier van Beemen

Originally published in 2015 by Uitgeveri Prometheus, Amsterdam,

as Heineken in Afrika

English translation Bram Posthumus, 2019

All rights reserved.

Distributed in the United States, Canada and Latin America by

Oxford University Press, 198 Madison Avenue, New York, NY 10016,

United States of America.

The right of Olivier van Beemen to be identified as the author of this publication is asserted by him in accordance with the Copyright, Designs and Patents Act, 1988.

A Cataloguing-in-Publication data record for this book is available from the British Library.

ISBN: 9781787382350

www.hurstpublishers.com

Transparency is beautiful if you have nothing to hide

Heinekens advertising slogan in Sierra Leone

Iceri ceza umutima. Landre closes his eyes and lifts his hands skywards. Beer enchants the heart, he translates. He seems to be entering a trance-like state, thoughts travelling far, far away from the drab concrete building on a mud road where I interview him:

We worship beer. Beer is part of each important moment in life and every ritual. It starts with birth. A new-born child receives a few drops to become strong. And dont forget the mother. While shes pregnant, she doesnt drink too much, but after she has given birth she drinks a lot. It improves her milk.

To illustrate his point, he puts his hand on his chest and squeezes it tenderly. Then you get the first communion, the first day at school, university, marriage, the funeral, first remembrance of the deceased, second remembrance There is always Primus or Amstel. Young girls praise its benefits. Its sacred froth to us.

Landre Sikuyavuga is the deputy director at the Iwacu newspaper in Burundi. His love for beer is far from exceptional. With a grin on his face, he retells the story about how the Libyan leader Gaddafi once suggested to his Burundian colleague to have the brewery in the capital Bujumbura replaced with a milk factory. That was something the colonel really hadnt thought through. Doing such a thing here is political suicide.

Burundi, a densely populated country wedged between Rwanda, Tanzania and the Democratic Republic of Congo, breathes beer. Crossing the border from Rwanda, the first thing you see is a large wooden billboard sporting the image of a traditional drummer, a national symbol. Look more closely at the space where his drum is, and you will find another national symbol: a glass full of beer carrying the Primus logo. Welcome to Burundi, the message reads. A little farther down the road, another billboard features the same brand: One history, one beer, Burundis pride.

On the mountain road from the border to the capital, cyclists struggle with their heavy loads. One man manages to carry an unbelievable fourteen crates of Primus while seated on his bicycle. Those who do not own a bike, mostly women and children, carry one or two crates on their heads.

Who brews all that beer? Heineken, lord and master of the local beer market, in good times and bad, for more than sixty years.

Africa is the beer industrys new paradise. Africans love their beer, even though sales remain modest. But here is the good news: purchasing power is rapidly increasing for many people, and the continents prospects are bright. The brewers have made their calculations, and the conclusion is that the African markets will see explosive growth.

In the battle for the continent, Heinekens starting position is excellent. The Dutch multinational has more than forty breweries in sixteen countries and exports its product to virtually every other market. The company is highly experienced: the worlds second-largest beer brewer (after AB InBev) has been exporting its products to Africa for more than a century. It started brewing locally as early as the 1930s.

International business considers Africa the final frontier, where enormous profits are to be had for daring entrepreneurs with stamina. Since the turn of the century, many national economies have picked up, and the birth rate is unstoppable. There is now a growing urban middle class who, to the delight of the brewers, consider drinking light-coloured lagers an important part of their newfound status.

Moreover, Africa represents far more than a golden promise, and Heineken is keenly aware of that. There is so little competition that in a lot of countries one small bottle of beer is no cheaperor even more expensivethan in Europe, while production costs are lower. Beer in Africa is almost 50 per cent more profitable than anywhere else. Some markets, like Nigeria, are among the most lucrative in the world. With this book, I attempt to uncover that secret.

The beer trade in Africa may be profitable, but it is far from easy. Most of the continents people are still poor, bad infrastructure turns the distribution of your crate of beer into a major challenge and there is a dearth of qualified staff. While wars, coups dtat and famine occur less frequently than during the disastrous 1980s and 90s, many countries are still looking for that elusive political and economic stability. Almost all economies continue to rely on commodity exports. When the oil price falls, Africas economic giantNigeriafalters.

Recent history in Sierra Leone offers another example of how vulnerable a country and its local beer market can be. At the end of a long and exhausting civil war, this West African nation was going through a period of impressive growth when it was suddenly hit by the deadliest Ebola epidemic on record. Years of progress were wiped out in a matter of months.

Obstacles are not only commercial; doing business in Africa leads to ethical dilemmas that can no longer be dismissed. Back in beer-crazy Burundi, Heineken works closely with an autocrat who binned his countrys constitution in 2015 by refusing to step down after his second and last term of office. As we will see, the regimes survival is intricately bound up with Heineken. The United Nations has recorded crimes against humanity committed by the regime, and yet Heineken agrees to have a high-ranking judge appointed president to the Board of Directors of its Burundi subsidiary. How should a business deal with such dilemmas? And where do the boundaries lie?

Six years of research have gone into this book. I have visited every African countryexcept Ivory Coastwhere Heineken runs breweries in which it has a majority shareholding: Algeria, Tunisia, Egypt, Sierra Leone, Nigeria, Ethiopia, Congo-Brazzaville, the Democratic Republic of Congo, Rwanda, Burundi, South Africa and Mozambique. And I went to Kenya where Heineken has an export office. I combed through the company archives, read all the literature I could get on the subject and spoke with 400 sources in and around the company. I also received confidential documents and USB sticks brimming with information.

The Dutch version of