By Staff Reporter
A new R400-million fund aimed at involving small and medium enterprises and historically disadvantaged people in the brewing industry will be rolled out over the next five years by brewing giant Newco, a merger of Distell, Namibia Breweries and Heineken. Heineken, which is based in the Netherlands, will own 65% of the shares in the new South Africa-based company following the Competition Tribunal approving the merger on 8 March. One of the conditions for the approval is that Newco must set up a Supplier Development Fund that will spend R80-million per year on including historically disadvantaged barley farmers in their supply chain.
Two model barley farms to train farmers in increasing their yields will be set up and the fund will support historically disadvantaged farmers to introduce new varieties of barley. The fund must create opportunities for businesses in agro-production, processing, storage, logistics and transportation, marketing, and seed, fertiliser and chemical distribution, the Competition Tribunal’s merger clearance certificate says. Another condition of the merger is that Newco must donate a further R40-million per year for the next five years to a government localisation and growth fund designed to benefit SMEs.
Distell and Heineken South Africa procured R4.7 billion worth of goods and services from historically disadvantaged people over the past financial year – 27.1% of their total procurement. The Competition Tribunal ruled that in order for the merger to proceed, Newco would have to “take every possible step” within five years of the merger to increase procurement of this amount. Another condition for the merger is that Newco must offer black women-owned businesses technical coaching on local agricultural production, processing and manufacturing.
The Competition Tribunal ruled that the fund may also offer development funding loans, commercial loan guarantees, direct grants and technical assistance, and skills development and training to SMEs and historically disadvantaged farmers, although Newco is not compelled to do this. Newco is also compelled to build a new R3.8 billion brewery within five years, and to find R1.7 billion to invest in a new maltery.
The company is also prohibited from retrenching any machine technician or production line workers for the first five years, but is allowed to retrench 166 workers above those job grades. However, small and medium businesses may potentially be disadvantaged by a consultative board that will be made up of unions and the Department of Trade, Industry and Competition. This board does not have any representation from the SME sector, yet will be able to direct the Supplier Development Fund money “to strategically important projects”.
A further loophole is that commercial farmers are also included, along with historically disadvantaged farmers and SMEs, in the Supplier Development Fund.