Beer from locally produced crops has businesses seeing double

 

Alliance magazine

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Brewing companies are finding a way of producing local economic benefits – in addition to the obvious immediate and individual benefits – as well as profits by selling beer in Africa. According to a recent article published by Ethical Corporation, SABMiller has developed a local beer brand in Uganda, Eagle Lager, that is brewed from locally produced sorghum. This sorghum is sourced from around 8,000 smallholder farmers and, says the Ethical Corporation article, this activity alone supports (through direct and indirect jobs) an estimated 34,000 jobs in agriculture in the country.

In Mozambique, SABMiller is using a different crop, cassava, to brew a local brand – Impala Lager. Launched in November 2011, Impala is made from 70 per cent cassava, though the economic effects of the initiative are not yet clear. The company expects to build up to using 40,000 tonnes of cassava a year, providing employment for 1,500 smallholder farmers. Heineken is doing something similar in Sierra Leone, where locally grown sorghum replaces some, but not all, of the barley traditionally used for brewing. This initiative started in 2005 and involves 3,000 farmer families across the country.

The national governments, seeing social benefits here as well as the potential for import substitution, have helped by applying different tax regimes to brews made from local ingredients. In Uganda the excise rate applied is 20 per cent, compared with 60 per cent for imported beers. In Mozambique, the government has agreed to a reduced excise rate that allows SABMiller to sell the beer at a price 30 per cent cheaper than mainstream lagers.

One of the reasons that SABMiller launched the new brands was to develop low-price products that would appeal to the Bottom of the Pyramid groups who can’t afford the traditional, high-price, brands and instead tend to drink ‘informal’ – an interesting euphemism – or illicit alcohol. The launch and subsequent success of Eagle has seen the company move from a position where the market was split evenly between SABMiller and its major competitor to a point where Eagle alone takes a 35 per cent market share.

Cassava, sorghum – what might be next? People throughout history and throughout the world have found many inventive ways of producing alcohol, among them soaking bread in water and allowing it to ferment, so who knows what multinationals’ research and development might come up with?

Source
Ethical Corporation, 29 August 2012

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Tagged in: Africa Beer Bottom of the pyramid Local solutions social enterprise


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