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(Business in Cameroon) - French group Castel announced plans to divest its shares in the mineral water segment in Cameroon. “If we find an acquirer in the next 5 to 10 years, we will probably sell our mineral water unit,” Stéphane Descazeaud, MD of SABC, Castel’s local brewing arm, said in an interview with Ecomatin.
The manager explained that the production and marketing of Vitale and Source Tangui (the company’s two water brands) were no longer profitable due to the fierce competition in the market but also the sharp increase in hydrocarbon prices. "SEMC (the mineral water unit) is operating in an extremely competitive market environment and the recent increase in fuel prices is not making things better. The water segment is a business of logistics and transportation without much-added value,” Descazeaud said.
Before SEMC got into deficit, the company was the leader in the mineral water market in Cameroon. This position was grabbed in 2016 by Sources du Pays, which markets the brands Ôpur and Supermont. This company closed that year with about 52% of the market share. Meanwhile, Castel’s subsidiary has suffered three years of successive losses (-CFA316 million in 2016, -CFA936 million in 2017, and -CFA799 million in 2018). A gradual recovery has begun in 2019, but so far SEMC is still struggling to regain its former position. After a profit of CFA331 million in 2020, then CFA729 million in 2021, the company faced a 42% decline in net income in FY2022.
Focus on profitable assets
Castel says it will now focus on its most profitable assets, alcoholic beverages. In 2022, the group finalized the acquisition of Guinness Cameroon SA from the British Diageo. The deal cost CFA300 billion. Subsequently, Castel announced an investment of CFA200 billion over the next five years to expand its footprint across Cameroon.
Specifically, through its brewing unit SABC, the company will build a distillery with an annual capacity of 10 million liters in Mbandjock, in the Central region. Building this facility will drastically reduce the import of raw materials for production, Castel said. The production of its glass bottle manufacturer Société Camerounaise de Verrerie (Socaver) will also be increased.
"We will be commissioning a furnace that has been inactive for several years. This will allow us to increase the production capacity of glass bottles by 50%, and to ensure the supply of all SABC factories, including Guinness, which used to buy its bottles outside Cameroon,” said Stéphane Descazeaud.
In the spirits segment, SABC has also just entered into a partnership with Pernod Ricard, following the bankruptcy of BVS, the former local partner of the French firm for these products.
Translated from French by Firmine AIZAN
Written by Cédrick Jiongo
English (US)