Heineken, Soufflet Malt forge South African supply partnership with US$108M investment

SOUTH AFRICA – French agro-industrial group Soufflet Malt, a subsidiary of InVivo Group, has announced plans to invest €100 million (US$108.8M) in a new malting plant in South Africa. 

The facility, which will be located in the Sedibeng district near Johannesburg, is part of a strategic commercial partnership with Dutch brewing giant Heineken and is expected to begin operations by mid-2027.

The new malting plant will produce nearly 100,000 tonnes of malt annually, supplying Heineken’s South African operations. This move is set to transform Heineken’s supply chain in the region by replacing 4,500 containers of imported barley with locally sourced grain. 

This is part of Heineken’s strategy to support local production and reduce logistical costs and emissions.

Strengthening local agriculture and job creation

Soufflet Malt has pledged to source 100% of its barley for the facility from South African farmers, including both commercial and small-scale growers. 

The company has been actively working in the region for several years, providing training and commercial support to farmers to enhance barley quality and yield. 

Industry experts anticipate that this initiative will encourage further investment in South African barley farming, which has seen fluctuating production levels since peaking at 588,000 tonnes in 2020.

The Sedibeng plant is expected to create 55 full-time jobs while supporting over 200 local barley farmers. 

The factory will be adjacent to Heineken’s Sedibeng Brewery, allowing for direct malt transport via a conveyor system. This logistical advantage is expected to streamline production and reduce carbon emissions, aligning with Heineken’s sustainability objectives.

Technological advancements and sustainability measures

According to Heineken, the new site will be the “most technologically advanced malthouse in South Africa.” 

The facility will utilize trigeneration and solar energy, aiming to cut emissions by 50% compared to the industry average. 

These sustainability initiatives align with Heineken’s ‘Brew a Better World’ program, which emphasizes environmental responsibility and community development.

Guillaume Couture, Soufflet Malt’s EMEA President, emphasized the significance of the partnership, stating that it marks a new chapter in strengthening South Africa’s malt supply chain. 

He added that the company is committed to fostering the development of sustainable barley farming across the country through ongoing farmer engagement and best agricultural practices.

Heineken’s expanding presence in South Africa

The investment follows Heineken’s merger with Distell and Namibia Breweries, which was finalized in March 2023. 

As part of its long-term commitment to the region, Heineken has been ramping up capital investment in South Africa, including plans to build a new brewery and malt production facility. 

The company’s South African portfolio includes brands such as Savanna Premium Cider, Amarula Cream Liqueur, Bain’s Whisky, Nederburg Wines, and Heineken beers.

Heineken’s Managing Director for South Africa, Jordi Borrut, described Soufflet Malt’s investment as a major commitment to the local market. He highlighted that the project highlights the company’s focus on local sourcing and job creation while enhancing supply chain resilience.

Global expansion and market positioning

Soufflet Malt operates 41 malting plants across 20 countries, with an annual production capacity of 3.7 million tonnes. 

The company supplies malt to major breweries, craft brewers, and distillers worldwide. In addition to the South African venture, Soufflet Malt is collaborating with Heineken on similar projects in Brazil and India as part of its expansion strategy into emerging markets.

Heineken, the world’s second-largest brewer, has faced financial headwinds in 2024, reporting a 1.2% decline in revenue to €35.9 billion (US$39B) and a 57.6% drop in net profit to €978 million (US$1B). 

Despite these challenges, its Africa and Middle East division generated €4.1 billion (US$4.4B) in revenue, accounting for 13.5% of the group’s total earnings. However, the company has also encountered operational disruptions, including conflicts affecting its facilities in the Democratic Republic of Congo.