Al-Ahram Beverages Co (ABC)/Heineken - Q1 2013


SWOT Analysis

Strengths

  • Dominant market position and one of Egypt's most profitable beverage companies.

  • According to company data, ABC holds an 11% share of the soft drinks market and a 93% share of the beer market.

  • Benefits from Heineken's reputation and financial strength.

  • Its Meister brand is popular, accounting for 45% of its beer sales.

  • Long-term export outlook looks favourable; Egypt is set to enjoy free trade access to the EU, adding to existing access to Middle East and Sub-Saharan African markets.

Weaknesses

  • Will have to invest heavily if its soft drinks division is to grow significantly, particularly as competition from Gulf companies intensifies.

  • Alcohol consumption levels are very low in the majority Muslim country.

Opportunities

  • The firm's entry into the non-alcoholic beer segment with its Fayrouz brand is a smart approach given the demand for these products.

  • Free trade access to COMESA markets and expected preferential market access to the EU is likely to boost export sales.

  • The company is expected to continue to widen its portfolio.

Threats

  • Competition is provided by the Egyptian International Beverage Company, which entered the market in late 2005.

  • Alcohol consumption remains closely linked with tourist numbers, and thus vulnerable to fluctuations in the number of visitors

Company Overview

ABC is owned by Dutch brewing major Heineken, which acquired the firm in a deal worth US$280mn in 2002. The company is estimated to have a market share in excess of 90% within beer. Its brands include Guinness, Stella, Carlsberg and Heineken. It also manufacturers a soft drink range that includes RC Cola and RC Orange, as well as ready-to-drink alcoholic beverages such as carbonated vodka I.D. edge. The company has five facilities (breweries in Giza, Sharkia, El Obour and Alexandria, and a malting plant focused on exports). Its United Distillery Group subsidiary is a prominent spirits producer, offering products such as I.D. vodka, Cubana rum and Butler's gin. A more recent addition to the company's portfolio is a range of sparkling malt drinks. Brands within this range include Amstel Zero, Birell and Fayrouz.

Strategy

ABC's strategic objective is to position itself as a beverage company, rather than as an alcoholic beverage specialist, in spite of its affiliation with Heineken. To this end, the company intends to continue the promotion of its Fayrouz non-alcoholic brand, as well as revamping its under-performing RC Cola brand. The brewer is also likely to focus on growing export volumes to compensate for Egypt's lack of beer demand. Currently, it exports to around 20 countries, mainly in Sub-Saharan Africa and the Middle East, and to parts of Asia.

At the end of 2010, Heineken was focusing on building its wine business in Egypt with the goal of shifting sales from tourists towards domestic consumers, who at the time accounted for only about 20% of the company's wine sales. In early 2011, the brewer temporarily suspended its operations in Egypt amid growing popular unrest and a political crisis.

This article is tagged to:
Sector: Food & Drink
Geography: Egypt, Egypt, Egypt, Egypt

Related products in our Store...

Check out our most popular reports below or view more in our store