Walia Takes Over – Heineken’s Domination of the Ethiopian Beer Market

by Zelalem

Amanuel Kiros, a purchasing manager at a private construction company, started drinking beer when he was a student at Gondar University five years ago. Around 6:00pm on Tuesday December 2, 2014, he was at Bama Bar and Restaurant, located at Megenagna, beside Zefmesh Grand Mall, on Kenenisa Street. The compound had several tents with tables that seated up to five people, and most were already occupied.

Amanuel had a tent all to himself, with two empty and one half full beer bottles in front of him. “I used to drink Dashen beer, until last September. I made a switch when Walia came,” he said. “I made a shift because I found Walia better in taste and because it does not make me feel tired. And more than anything, I believe I am taking part in supporting our national football team while using one bottle of beer, as the company is the main sponsor of the national football team.”

In an increasingly more diversified beer market, with more to join soon, Heineken, one of the world’s largest brewers, comes to own old brands in Ethiopia, and yet disrupts the market with a totally new brand. It named this brand Walia, the same as the national football team, which, in recent years, has managed to lift football fever in the country.

The market share began to shift in 2011, when global giants Heineken and Diageo joined the market, turning it into a show of force between global beer makers who have been taking chunks of the market. And now Walia is bolting away, with a good share of the market, at least for a while.

Heineken, one of the largest international breweries in the world, with brands in 178 countries, and an annual production capacity of 178.3 million hectolitres, acquired Bedele and Harar breweries in 2011 for 163.4 million dollars. It has since constructed a new factory, near Kilinto in Akaki Kaliti District, Addis Abeba, where it has been producing its new Walia brand since September 2014.

Then followed Diageo, a premium drinks company, which produces 65 million hectolitres from more than 100 sites in 30 countries. It bought Meta Abo Brewery S.C. for 250 million dollars in 2013.

Since 1922, the French company BGI has operated in Ethiopia, acquiring St George Beer. BGI Ethiopia has a 42pc share in Raya Brewery, which will join the market in January. Bavarian, NV, a Dutch company, also has a 49.9pc share in Habesha Brewery, which is under construction. Dashen Brewery is another company located in Gondar. The brewery had an initial annual total capacity of 500,000 hectolitres, and current production output stands at 900,000 hectolitres annually.

The country’s beer production is also expected to grow significantly in the near future, with the entry of new companies, such as Raya Brewery S.C and Habesha Brewery S.C.

For now, Heineken, with its suddenly popular Walia brand, seems to be the one devouring the market. Mered Asefaw, a 38-year-old business man, has been drinking beer for the past 10 years, primarily drinking St. George beer, and if that is not available, drinking Castel, both products of BGI Ethiopia.

“It is obvious that most Ethiopians are curious about new things and I believe that this is the reason behind the shift in preference,” he argues.

Data collected by Fortune from bars indicates a decisive shift towards the new beer. One bar along Sierra Leone Street, that declined to be identified, showed its sales report for two weeks to Fortune. The 15 day data showed that Walia alone sold almost exactly as much as all the other beers put together, with Walia counting 7,641 bottles, and the rest selling 7,748 altogether. St George was a distant second with 3,834 bottles, with Dashen and Castel selling nearly the same amount at 1,045 and 1,028 bottles, respectively. Bedele and Meta each sold 739 and 718 bottles, each, Amber, 232 bottles and Harar 152.

Azemach Hailu, a manager at Bama Bar and Restaurant, tells the same story of a customer shift since the Ethiopian New Year. As a result, he is obliged to change his orders.

“We have all the brands of lager beer being produced in Ethiopia and we sell them all at a price of 14 Br. Currently, we sell 70pc Walia, 15pc St. George and the rest take the remaining 15pc, approximately,” he told Fortune.

The gap is much narrower at Bridge Hotel, located around Sarris in Debrezeit Avenue. It serves all local beers, but the “difference is visible” and the hotel cannot get enough Walia, according to its manager, Solomon Berga.

“If 240 bottles of St. George is sold per day, around 300 bottles of Walia will be sold. From an equal number of bottles received, we finish Walia first,” he said.

Another manager, Dejene Worku, at Tina Bar and Restaurant, located around Saris, Debre Zeit Road, has also closely followed the shift: “First I thought that the public had a great tendency towards trying new things and that was why Walia has become popular,” he says, “but now the beer’s popularity is becoming visible, as so many people want to drink it.”

Just as Amanuel prefers Walia because it does not make him tired, Fikru Yosuf, a 33-year-old father of two and a lorry driver, an occasional drinker, is among the crowd that made the shift because of a “better healthy feeling and satisfaction from Walia.” But the beer is always in short supply, particularly when he travels out of Addis Abeba.

BGI, which downplays the competition, and Meta, which is trailing far behind admit fierce competition. Both sound confident, despite Walia’s rapid rise.

BGI Ethiopia’s Marketing Manager, Esayas Hadera, claims that there was not that much competition in the Ethiopian beer market because the number of consumers, unlike West African countries, was small. St George is in a far better position than its competitors, he says, because it has a 50.1pc share of the market, according to its own research, and a higher annual production capacity of 2.7m hectolitres, with factories situated at different parts of the country.

“Above all, our factory has been with Ethiopians for the past 92 years and we have passed many ups and downs together, so that makes us preferable,” he argues.

The competition in Ethiopia’s beverage industry is fierce, and undoubtedly getting fiercer every day. This means there is a tough battle ahead, but the company is looking forward to coming out as number one, Blayne Tesfaye, Communications Manager at Meta Abo Brewery, told Fortune. She said that Meta’s share of the market, when Diageo took it over, was 14pc. She declined to give more detail about the current status of the company, only saying that it has invested millions.

“The iconic brand of Meta Beer has a legacy of having been the number one brand, and our vision is to return to the top,” Blayne claims.

Various officials of Dashen Brewery were contacted but declined to talk.

The current situation in the sector shows two things. Primarily, it can be considered as a wake-up call for new comers. Since the market is an oligopoly, they have to exert their full potential to penetrate the market through promotion and widening their destination. In other ways, it is a pre-portrayal of the challenge they could face, says Robel Teferedegn, an independent marketing consultant.

“The good thing is, we have worked hard on marketing through testing our products for the past three months and I believe the competition makes us perfect,” argues Atakilti Kiros, general manager of Raya Brewery S.C, which is expected to enter the market at the end of December 2014.

Currently, Ethiopia’s total beer production capacity stands at 7.1m hectolitres annually. BGI Ethiopia’s capacity stands at 2.7m hectolitres from its three factories at Addis Abeba, Hawassa and Kombolcha. Heineken S.C., which owns Walia, Harar and Bedele breweries, has a capacity of 2.5m hectolitres. Diageo, owner of Meta Abo Brwery, and Dashen Brewery S.C., follow with one million and 900,000 hectolitres, respectively.

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