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The Ethiopian beer market is growing. The market practically doubled over the last 5 years but the per capita consumption is still relatively low compared to other East African markets. The main drivers are a growing population, urbanization and rising incomes. Interested in exploiting this trend, HEINEKEN, in 2011, acquired Harar and Bedele Breweries. In 2012 the construction of a new greenfield brewery was announced, which will be operational in 2014.
HEINEKEN’s Robert Bosman who is Senior Director Supply Chain, Region Africa & Middle East (AME) was in Ethiopia to asses his company’s performance here. He sat down with Groum Abate to talk about the general business environment. Excerpts;

Capital: Can you explain to me the purpose of your visit?
Robert Bosman:
Maybe it is better to first describe what my role in Heineken is. I am part of the Africa-Middle East group. I am the Supply Senior Director responsible for those regions. Since Ethiopia is a part of that, I make regular visits. It is part of my job to travel to the plants and see how they are performing. It is through these visits that we identify what the plants need and we provide support accordingly.
Capital: How is the competition in the region generally?
As you know Africa, in the last 5 to 10 years has really been growing fast and I think the big brewers that were active on the continent discovered the potential and all of them are investing left and right. Diageo, Castel, SAB Miller these all do similar things looking for the business potentials and based on the assessments of those potentials they invest in different countries.
Capital: So what do you think of Harar and Bedele’s performance now after you acquired it?
When you compare world class performance, and African performance it needs improvement. Since we came, we had discussions with the local people and we tried to improve on the performance side to increase the output of the product and to enrich the quality. Heineken has three basic values which we really cherish. One of them is passion for quality and I think the consumers should have the best quality possible. This is what we try to achieve now with Harar and Bedele.
Capital: You are currently constructing a new brewery on the outskirts of Addis. How will this impact the company’s performance once it goes operational?
The brewery that we are building is state of the art. We believe in the future of this continent so when we do something we do it right. We buy all our equipment from Europe and the fact that Europe is not moving at the same pace as Africa at the moment, in fact it is even slightly declining; in 5 to 10 years this country will have more modern equipment than we will have in Europe and for sure it will increase our production.
Capital: Are you planning to export your products once the new brewery goes operational?
It is one of the possibilities, yes. The fact remains that Africa is a vast continent and in order to be able to export we need infrastructure. That means you need to have roads and railway lines to get to other countries.
Of course if you look at what is being written on Africa, you see that there are a lot of development projects coming up. The moment those projects materialize, they will enable the type of movements that are needed.
We are also extremely interested in the raw material aspect of the business. Ethiopia is an agricultural country with a lot of potential.  
We, in cooperation with the Dutch government,will help create public private partnerships to develop a sustainable supply chain of raw materials for our own needs in Ethiopia and hopefully overtime when there is more production, we can export to countries where we are active as well.
Then again the possibility of that depends largely on the speed at which the infrastructure is developing.  It is one of the things which we monitor closely.
Capital: Besides your current products Harar and Bedele, are you planning to produce other Heineken brands, (possibly canned products), once the new brewery is completed?
Yes we are planning to produce other Heineken brands but not canned ones.  Producing canned products is a bit complicated because you will need cans to be manufactured, and there is no one that does that right now in Ethiopia.
In Nigeria for example, we got a third party to invest and start manufacturing cans in the country. We bought their cans they manufactured in Nigeria and it is a big success today.
Currently there are three can factories in Nigeria, two of them working and one being built that created a lot of jobs and contributed to the growth of the economy.
For us, to bring empty cans to Ethiopia then fill it and sell, that is not really the thing to do time wise.
Capital: So how do you see the market in Ethiopia compared to other countries in the region?
I do believe that the market has potential. It is true that when you look at the per capita consumption, it is still rather low. I think with the growing GDP and with the growing purchasing power there is a huge potential for selling beer. This is part of the reason why you find almost all of the big breweries active in Ethiopia.
Capital: You were a little late in entering the African market when compared to SAB Miller and Diageo.
As Heineken we have been in Africa since 1923, we are very active here.
Africa is vast. If you go to West Africa, to Nigeria for example, you will see that all the breweries are Heineken’s. We have part of the shares of Nigerian market, we are the major stakeholders. But there are also a lot of third party shareholders. 
When you go to the Democratic Republic of Congo, there is competition with Castel. If you go to North Africa, Egypt, Algeria and Tunisia, it is the same thing.  We are all over the place.
There are some spots in Africa where we are not present but you can not be everywhere. 
Capital: How do you see the competition here?
We believe that the market was still undersupplied.
If you look at the competition between Diageo, it is a competition like everywhere. I think competition is good, especially for the consumers.
We know Diageo is a tough competitor but we are a tough competitor for them as well. So we will see. It will evolve over time.
It is when all the players are out there Ethiopia will be a strong playing field in the battle to win the favor of the consumer.
Capital: Why are you so interested in entering the Ethiopian market when Kenya is a much more viable option?
We look for potential. Per capita share is still low but it can become bigger. I do believe that Ethiopians like beer to be honest; over time this market will grow and we believe in the potential.
This is why we invest. The moment that Heineken invests, it is not for short term gain.  If we enter a country, we enter it to stay. We want to become one of the leading brewers if not the leading brewer in Ethiopia. We will do our utmost to give a tough competition.
Like I said I believe that competition is very good and interesting, especially for the consumers. Ethiopians are entitled to have different competitors in the market because it will give them the products they are asking for at a competitive price.
Capital: Do you have any plans to expand the existing Breweries Harar and Bedele apart from the current project?
No. We have Kilinto and we already invested quite a lot of money in Harar and Bedele, millions of Euros.
One of the things we did is put in a brand new state of the art, modern packaging line in Bedele. That of course increases the capacity of the brewery. We also invested a lot in the environment, as one of Heineken’s basic values is respecting the environment.
We install a waste water treatment plant wherever we have a Heineken factory. This is a policy that has been in effect for the last 15 years for Heineken and we do that also for Africa. We need to make sure that we respect the environment and manage the  waste that we discharge into the system properly.
Capital: Are you planning to invest in other breweries in Ethiopia?
What we want to become is a leading brewer in Ethiopia. That largely depends on the speed in which the market develops. If the market develops fast, then we will think of investing.
We tried to buy all the breweries available for sale; Harar, Meta and Bedele. We were lucky to get Harar and Bedele. The competition was lucky to buy Meta Abo. We believe that the market is under supplied so what we do is we invest to ensure that we supply the consumer with what they want to buy.