Tanzania's Serengeti hits back in brewing dispute
George Obulutsa, Forbes.com/Reuters, September 4, 2009
DAR ES SALAAM, Tanzania - A dispute in Tanzania's brewing industry flared up again on Friday as Serengeti Breweries said SABMiller had offered to buy it in a move which would have damaged competition in the east African country.
SABMiller and rival international brewer Diageo are both attempting to increase their presence in the region and the latter's Kenya-based East Africa Breweries (EABL) had agreed to buy a stake in Serengeti, while ending a manufacturing and distribution contract with SABMiller's Tanzania Breweries (TBL) .
The London High Court granted SABMiller an injunction against that move last month and Serengeti has now responded to the ruling by saying claims its planned partnership with EABL was negative for competition in Tanzania were disingenuous.
'It is interesting to note that TBL's parent company, SABMiller, recently made a proposal -- at a very generous price -- to acquire SBL,' it said in a newspaper advertisement, without revealing how big the offer was or when it was made.
'If this attempt had been successful, this would only have served to restrict competition still further and potentially result in the closure of a number of breweries. Why would the same business need more than one brewery in the same town?'
Neither TBL nor SABMiller officials were immediately available for comment.
The injunction blocks EABL from acquiring Serengeti until January 2011. The court's ruling said the dispute would be determined by an International Chamber of Commerce arbitration.
As part of their 2002 contract, EABL and TBL each took a 20 percent stake in Serengeti. The deal -- which resulted in SABMiller's closure of its plant in Kenya and reciprocal action by EABL -- was reached to end a hostile pricing war.
TBL has a beer production capacity of just over 3.4 million hectolitres and sells about 3.25 million annually. Serengeti's capacity is 1 million hectolitres, which would be boosted by the construction of a third plant due for completion next year.
'We believe our intended partnership with EABL is for the good of the company, its employees and the consumer,' Serengeti said.