Heineken Ethiopia – Looking to the Long Term
We see how Heineken has entered the Ethiopian market with a long-term strategy and the flexibility necessary to meet unforeseen challenges.
Heineken entered the Ethiopian market in 2012 by acquiring two previously state-owned breweries. Only two years later the beverage company built a new state-of-the-art facility that was triple the size of its previous breweries. From the beginning, Heineken has been extremely serious about building its market in Ethiopia as a long-running concern.
The Heineken brand itself is one of the first and best-known international brands. Next to that, we have a portfolio of brands because we had the brands of the existing breweries we bought,” says Alexander Brinkerink, the Supply Chain Director for the firm. “We’re the only company here with an international brand and a portfolio of products to cater to all tastes.”
While Ethiopia is, without doubt, an appealing market for Heineken, moving into that market has not been a completely smooth ride.
“Ethiopia presents some difficult challenges as a landlocked developing country. So, it is not always easy to bring raw materials and construction materials into the country. The road network is not as good as some other countries,” Brinkerink admits. “However, in comparison to other developing countries, Ethiopia is actually doing quite well with steady economic growth, a well-educated population, and the high-speed modern train line all the way to the city of Addis Ababa. All in all, we believe this is a great place to be as a brewer.”
Brinkerink joined Heineken Ethiopia in 2018, and from the start, he was impressed by the well-trained, highly-motivated people he found there. He credits that to the holistic approach to training Heineken puts its people through.
“That is partially because of the effort we put into training by bringing people from other Heineken breweries in Africa but also training people by sending them abroad to our other breweries in Africa to learn for themselves how to operate a brewery,” Brinkerink explains. “Part of the investment at the new facility has been a training school with a number of classrooms covering all aspects of our work – packaging, beer, maintenance. Students can practice live with the correct tools, and without Covid-19 right now we would have completed a small microbrewery, all manual. We train our guys to be ready for highly automated equipment but also give recruits that hands-on experience.”
Ready for Covid-19
Heineken Ethiopia, like many businesses, recently encountered new challenges in the form of the Covid-19 pandemic.
“These are weird times,” as Brinkerink points out. Ethiopia was fortunate in that its position meant the pandemic was delayed in reaching the country- they did not have their first case until mid-March, and even by May, they had only one or two hundred cases. However, from the very beginning, Heineken Ethiopia was laying the groundwork for their response to the virus.
“It’s only in the last three to four weeks we’ve seen more exponential growth. We’re at the beginning of the curve while other countries are in recovery,” Brinkerink says. “We knew Covid-19 existed, so as of January we have been preparing ourselves and our staff, and when we had our first case in Ethiopia, we had action plans ready. We have been setting things up to allow people to work from home, which is not always easy because phone and internet connections can be flawed here. We put handwashing stations throughout our breweries. We also distributed soap to the communities around the breweries knowing our people are living there. We have distributed face masks for our staff, as well as indirect staff, the guards, people serving food in the cafeteria. It makes no difference where you come from if you work in our breweries you get our support.”
It is clear how proud Brinkerink is of the way his company, and community, have adapted to the challenges of the pandemic.
“We’re really on top of things, sharing information on what Covid-19 is, where it comes from, how to keep your distance and wash your hands. We’re staggering shifts so that not everyone comes into the canteen at once. I’m really proud of our team because everyone responded so efficiently,” he says. “For instance, in Ethiopian culture eating is something that absolutely happens together. It’s very common for a few colleagues to have one big plate of food to share. To tell people they’re not allowed to do that and have their own plate and sit at a distance, to keep themselves and their colleagues safe, it’s hard, but people listen and people do what’s necessary. The future is difficult to predict, though. COVID is new for the whole world and time will tell whether we have done all the right things.”
Going forward, Brinkerink expects to be able to build on the foundation of the fantastic people Ethiopia offers to achieve great things in the sector.
“Ethiopia is a fantastic country with strong underlying economic growth, in the short term slowed down by Covid-19, but in the long term a market where the GDP will continue to grow and money will be available to enjoy a beer,” he says.
That growth, for Brinkerink, is not simply a matter of sales or market share, however. Heineken is looking to build a lasting enterprise in the country.
“When we invest here, we invest not only in breweries but in a programme of local sourcing of barley,” Brinkerink explains. “Investing in a huge state of the art brewery and in agriculture is a long-term commitment, and we have made a long-term commitment to grow with Ethiopia.”
This is an important step, especially considering the odd position of Ethiopia’s barley-growing sector.
“The interesting thing is for a long time it’s been more expensive to buy barley locally than import it, but we’re here for the long-term,” Brinkerink points out.
It is an issue Heineken is fully engaged with.
“What we’ve done is train our own staff as well as farmers in a joint effort between EUCORD, IFC, and the Dutch Ministry of Foreign Affairs, and rolling forward a local malting plant will be part of that. We’re providing seed, training, support to over 40,000 farmers on a yearly basis,” Brinkerink points out. “I’ve visited some of those farmers myself, it’s beautiful to see our people taking this new way of working onboard. They’re getting to buy new sheds to store barley, new tractors some of them. If we’d only looked at short-term costs we’d have never done this, but long-term this will work. It’s not directly linked to the brewery but I’m very proud we’re building this long-term sustainable future. It’s good to know you’re making a difference.”