Diageo in African link with Heineken

Diageo, the world's largest spirits group, has unveiled details of a new South African joint venture with Heineken, the leading premium beer group.

Diageo, the world's largest spirits group, has unveiled details of a new South African joint venture with Heineken, the leading premium beer group.

Paul Walsh, the chief executive of Diageo, has long expressed his admiration of the Heineken business and the launch of a South African joint venture is an important development between the two companies.

Mr Walsh believes the two companies could enjoy significant synergies when marketing and distributing their respective ranges of premium drinks. He believes Diageo's spirits portfolio is a natural fit with the Heineken brand, which is sold as a premium export beer.

Diageo and Heineken announced yesterday that the new company, which will combine their sales and marketing operations, will be called brandhouse. It will have sales of about £270m. The launch follows last year's acquisition by Diageo and Heineken of a 28.9 per cent stake in Namibia Breweries, the southern African beer business. Combining their sales and marketing operations was given regulatory approval in April, allowing the two groups to press ahead with the joint venture.

The deal will allow the company's sales force to offer both supermarkets and bars a portfolio of brands combining Heineken and Guinness with Scotch whiskies such as Johnnie Walker, Bells and White Horse. Diageo's other spirits brands such as Smirnoff and Captain Morgan rum will also be included.

The new operation will challenge SABMiller in its own domestic market where it has always dominated. However, as consumers develop more expensive tastes, Diageo and Heineken believe it can challenge SABMiller's dominance in the premium sector. Simon Litherland, the brandhouse managing director, said: "South Africa is an incredibly exciting market for us. Overall growth in the liquor industry has been minimal for some years now, but the premium sector is growing very fast."

The drinks industry will be watching the new joint venture closely. How successful the venture is may give more clues as to whether Diageo and Heineken plan to forge similarly close links in other markets around the world.

Diageo styles itself as the world's leading "premium drinks business" and has completed an integration of the Guinness brand into its sales and distribution network for its spirits brands. The company has not ruled out expanding into lager to complement its existing portfolio but would shy away from expensive acquisitions. It has long taken an interest in wine but has resisted many acquisitions for being too expensive.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?