By O.G Analysts
Netherlands’ based entity, Heineken N.V and France’s Castel Group are the strongest contenders in the rumoured sale of Diageo’s stake in East African Breweries Limited (EABL). Diageo is pursuing an Asset-Light model and thus defooting its boots from Africa as it pursues a wider business recovery.
As part of these efforts, Goldman Sachs and Bank of America were contracted to evaluate and follow through with the deal that will see EABL sold off. We’ve now learned that the two major parties that have expressed interest in the acquisition are Heineken and Castel Group.
Castel Group seems most favoured having already acquired Diageo’s stake in Guinness Ghana. Castel Group is also seeking to use its hold on the beer distribution to roll out its wine footprint in East Africa. Castel Group is already the largest French Wine producer and wine uptake is growing rapidly in East Africa. The Wine segment is the fastest growing segment in the premium market versus Whiskey, and Liqueurs. There’s a booming restaurant scene in the East African capitals and a premium events explosion. Castel Group is positioning itself for this.
However, Heineken has also for years waited for a chance to make an inroad into Uganda and Kenya. An acquisition of the beer business of EABL presents that chance. It can then roll over the already established breweries and the massive capacity expansions that EABL did pursue in the past five years.
Thus, ultimately the conversation is between the Dutch and the French. Both firms see this as a strategic entry opportunity in Africa’s most promising region when it comes to Adult Beverages. Castel Group has the edge but insiders at Heineken state that it’s preparing to make an offer that will be hard for Diageo to reject.
Ultimately, the winning bid will hinge not only on financial terms but also on who can offer Diageo the strongest strategic partner for future growth in East Africa’s evolving alcohol market. Castel’s wine-led premiumization strategy presents a compelling case. But Heineken’s entrenched presence and infrastructure advantage could make its offer difficult to beat. This contest between French and Dutch interests signals a potential reshaping of the region’s alcohol industry and highlights East Africa’s growing importance as a gateway to broader African markets