Gov't Hints Diminishing Interest in Beverage Industry

CEO of Diageo Global delighted over investment in Ethiopia
Following the coming of giant international breweries to the country, the beverage industry in Ethiopia has been showing growth in the past couple of years which in turn is attracting international business figures like Ivan Menezes, Chief Executive Officer (CEO)
of Diageo Global, who were in town this week to oversee his subsidiary in Ethiopia. However, this fast-paced expansion exhibited in this industry might no longer be the case in the foreseeable future.
Asked by The Reporter about the current situation in the beverage sector, Minister for Communication and Information Technology and Coordinator of the Finance and Economic Cluster with the rank of Deputy Prime Minister, Debretsion Gebremichael (PhD), hinted that his government may no longer continue incentivizing the industry the way it has been doing in the past few years due to the belief that local consumption should be discouraged to maintain a healthy society.
However, acclaiming the linkages the beverage sector has brought about between the manufacturing and agriculture sectors, the Deputy PM echoed his government’s stance about discouraging alcohol dosages; rather saying export is more preferred. Yet, the growing beer business in Ethiopia has been acclaimed for creating more new jobs and sustainable markets for smallholder farmers. Diageo alone has a contractual agreement with six thousand smallholder farmers to supply barely to the brewery.
While attending the inaugural ceremony of Diageo’s expansion project in Sebeta town of the Oromia Regional State, some 23km to the west of the capital, the Deputy PM said that he conferred with Diageo’s Ivan Menezes that they need to redirect their focus on the export side. He further noted that the government is prepared to push players in the industry to do the same.
In their VIP talks, Menezes and aides requested the government “not to penalize Diageo” that according to Debretsion translated into asking the government not to withdraw incentives dreading the fall of the expanding beer sector. Debretsion comforted Menezes saying that it’s too early to do so, yet he reiterated that the government has an intention to shift the benefits breweries are enjoying currently towards prioritized industries such as textile, leather and the like.
In a related news, Menezes said that Diageo has spent a total of USD 344 million in the past three years. Back in 2012, the multinational alcoholic beverages company, acquired the then state-owned Meta Abo Brewery for USD 225 million. Later on, Diageo embarked up on additional USD 119 million expansion program to triple the plant’s capacity of bottling 1.7 million hectoliter per year. Three years back, the production capacity was somewhere around 500 thousand hectoliters.
Asked about Meta’s biggest fear, Francis Agbonlahor, CEO of Diageo Ethiopia, said that his company has nothing to fear in its future activities. “I have no fear; not at all. The per capita consumption in Ethiopia is less than five liters. But, its 28 in Kenya, 50 or so in South Africa and in above 30 in Nigeria. Hence, beer consumption in Ethiopia is way below the average in Sub Saharan Africa,” Agbonlahor said.
Though Debretsion says that Diageo and the like rarely export their products, Agbonlahor argues that currently Diageo’s products are making ways to the US, Israel, Germany, France and South Sudanese markets; Meta Abo is set to sign a contract with UK’s distributor for a new brands destined for the UK market.
The total beer production volume tends to be at some six million hectoliters per year exceeding the government’s target way ahead of the schedule set in the five year Growth and Transformation Plan (GTP). There are some seven breweries operating and two others in the pipeline.

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