SABMiller expands in Nigeria to take on Heineken

Brewer SABMiller is to spend over $100 million to build a new brewery in Africa's second largest beer market Nigeria to take on the country's brewing heavyweights Heineken and Diageo.

Africa's biggest brewer said on Tuesday it will build its new brewery on a greenfield site at Onitsha in southeast Nigeria, to expand its presence in the country after buying small beermaker Pabod Breweries Ltd in 2009.

Nigeria's annual beer market of around 18 million hectolitres is second only to South Africa on the continent and is dominated by Heineken, with around a 70 percent market share, and Diageo's Guinness business with over 20 percent, leaving SABMiller a share of less than 5 percent.

The fast-growing Nigerian beer market has grown at an annual rate of 9 percent in the last 10 years and Heineken acquired controlling interests in five breweries in January to expand its capacity there by nearly a third .

The SABMiller new brewery will produce local brands Grand Lager and Eagle and also Castle Milk Stout and will have an annual capacity of around 500,000 hectolitre of beer and malt beverages, and be able to bottle water and other beverages.

SABMiller Africa - which is 62 percent owned by SABMiller and the rest by privately owned drinks group Castel - will own 80 percent of the new business with the Anambra state government and other Nigerian investors holding up to 20 percent.