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Beer brands are arguably some of the most recognisable to the expanding consumer market in Africa, with local bars decked out in their paraphernalia and people demonstrating loyalty to a particular brew.
South African brewing company SAB Miller, which distributes 45 beer brands across the continent, reported in May that emerging markets including Africa and Asia accounted for more than 80% of its profits, which grew by 26% last year.
Social drinking might be seen from the outside as a decadent extra that precludes many of Africa’s lower income classes, but SAB Miller is working to change that by extending its brand and product portfolio to address what it describes as the “informal drinking market”, or people consuming affordable home brew concoctions.
The brewer wants create a range of cheaper ’sub-mainstream’ brands as well as more premium offerings.
SAB Miller Africa marketing director Dave Carruthers says the company estimates the ’informal’ market could be up to four times the size of the mainstream market.
“Creating affordable, high-quality beers that are accessible to this section of the population is an important part of our strategy in Africa,” says Carruthers. “They are already drinking informally, so we’re not talking about consumers who aren’t already participating. Rather, it is a case of bringing them into the formal market – and away from a segment that is not only unregulated but has products that could be potentially dangerous.”
Carruthers explains how this affordability strategy began in Uganda in 2002, through the development of Eagle lager, which is made
from the plentiful local crop sorghum.
Eagle was launched after a process of determining the right variant of sorghum for brewing, as well as collaborating with the government and local farmers.
“Because all the sorghum was locally sourced, the government recognised the benefits to the local labour market and was willing to give us an excise break, which enabled us to make Eagle lager more affordable,” says Carruthers.
SAB Miller’s local sorghum suppliers are not only benefiting from a new income stream for which the company has set a guaranteed, often above market, price, but are learning more efficient farming practices.
Eagle Extra is now the company’s second biggest beer in Africa, priced at about 80% of the cost of products in the mainstream beer segment. SAB Miller has continued to look for cost-effective brewing ingredients and plans to launch its first cassava-based beer in Mozambique, priced at about 70% of the mainstream category.
Although the company has faced harvesting challenges because of the vegetable’s short lifespan once picked, the company hopes the initiative will provide an income to several thousand farmers in the country.
Commercial development comes with added responsibility on the continent. In the developed world this may be called ’corporate responsibility’ but Andy Wales, the company’s head of sustainable development, says that initiatives may have a social element, but ultimately are done because they make business sense.
On top of working with governments to develop responsible drinking programmes, Carruthers says the company arranges free HIV testing for all employees in Africa, with a take-up of 94%, he says. And 99% of those who test positive are receiving treatment.
“We have put them on managed health care programmes which we fund. We offer the same for spouses and dependents. In Uganda we offer testing in people’s homes to encourage them to participate by making it more discreet. We motivate them, too, by offering a free mosquito net if they agree to be tested. We need healthy employees and a healthy supply chain, so it’s not merely about philanthropy, but developing a thriving economy.”
By carrying out its commercial interests in a way that considers the often sensitive economic and social situations of the African markets, SAB Miller hopes it will become part of a sustainable African business environment.