AB InBev cleared to produce Guinness, Smirnoff RTD in South Africa

Anheuser-Busch InBev has received the approval from South African regulatory authorities to start producing Guinness stout and Smirnoff ready-to-drink (RTDs) in South Africa.

The Competition Tribunal of South Africa announced last week that it has granted South African Breweries (SAB), the local unit of Anheuser-Busch InBev the approval to produce, distribute, market and sell Guinness stout and Smirnoff RTDs – Storm, Guarana, Spin, Pine Twist and Berry Twist in South Africa in exchange for royalty fees paid to Diageo Plc, owners of the brands. The financial details of the transaction were not disclosed.

According to the deal, Guinness stout will continue to be imported from Nigeria until local sales volume reach a certain level before SAB can start local production.

Speaking on the deal, Andrew Murray, vice-president for finance at SAB and AB InBev Africa, said the licensing agreement is a “great opportunity” that will allow the group’s “distribution capabilities to increase the availability of these brands for consumers and to drive profitable growth for these brands”.

Also commenting on the deal, British-based Diageo Plc said the deal with SAB “represents the next chapter in the development of our many well-established RTDs as well as the beginning of a chapter for Guinness in South Africa, which will now be sold through a dedicated beer route to market”.

SAB and Diageo began discussions on the deal about one year ago. Diageo wanted to focus on its spirits portfolio in South Africa. The RTDs and Guinness were previously part of a joint venture between Heineken, Namibia Breweries and Diageo, which was dissolved in 2015.

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