• SAB has won competition approval to take over the distribution of iconic Irish beer Guinness in South Africa – with conditions.
  • One condition: if a secret threshold of Guinness sales is reached, it will have to be brewed locally.
  • But Guinness is not hugely popular in SA, and the deal will require well over 4 million cans of Guinness to be sold per year.
  • For more stories go to the Business Insider South Africa homepage.

If within the next three years South Africans take a liking to iconic Irish beer Guinness, South African Breweries (SAB) could be forced to start brewing it locally under the terms of a new deal.

But South Africa would have to really take to the dark stout, consuming what Business Insider South Africa understands is the equivalent of more than 4.5 million cans of Guinness every year for that provision to kick in.

Last week SAB, the local subsidiary of beer giant ABinBev, won the approval of the Competition Tribunal to take over local distribution of some products made by its competitor Diageo, including Smirnoff-branded flavoured drinks and Guinness.

The deal represents "the beginning of a chapter for Guinness in SA which will now be sold through a dedicated beer route to market," Diageo said in a statement.

See also: Heineken is betting R1 billion that more South Africans will switch to its beer – and so far it hasn’t been wrong

The reach of SAB's distribution infrastructure is the stuff of legend in its industry, and should put Guinness on more shelves and in more bars than ever.

As a condition of its approval of the deal – which effectively removes a competitor from the beer market – the Competition Tribunal stipulated that SAB must start producing Guinness draught in South Africa if a "feasibility threshold" of sales is reached within the next three years.

That threshold number is confidential and has been redacted from public documents, but Business Insider understands that it is two million litres, or the equivalent of more than 4.5 million standard 440ml cans of Guinness.

The exact amount of Guinness drunk in South Africa is also confidential, but last week Diageo described it as being "still a very small premium stout brand in SA", with consumption below one percent of SA's total beer market.

The Guinness consumed in South Africa is currently imported from Ireland. 

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