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Spirit Maker Diageo Says To Go It Alone In South Africa and Namibia

Spirit Maker Diageo Says To Go It Alone In South Africa and Namibia

Diageo, world’s largest spirit maker, has said it has agreed to dissolve a joint venture with Heineken in South Africa and Namibia Breweries Namibia three years ahead of schedule.

The world’s largest distiller, that produces brands like Smirnoff Vodka and Johnnie Walker Scotch whisky, is not moving to own its operation in these two Southern Africa countries, increasing its control in a market it views to be significant to its future growth plans.

Diageo had previously agree to end the two joint ventures in 2018.

“We now believe that Diageo has the necessary scale to move to the next stage of growth,” WSJ quoted Diageo’s Chief Executive Ivan Menezes saying.

South Africa is Diageo’s fifth-largest spirits market by units sold, and its share of the market has increased from 26 percent to 40 percent over the past nine years, something the company says necessitated it to go it alone in the market.

According to a Reuters report, Diageo generates about a fifth of its annual revenue from beer, mostly the Guinness brand.

Diageo said it would receive net cash of 2.5 billion rand (127 million pounds) from deal expected to be completed by the end of the year. Heineken said the overall cost to it would be 1.9 billion rand ($151.40 million).