To ease your site search, article categories are at bottom of page.

January 18, 2010

Beer brewer to buy Angolan sorghum

by Richard Lapper

Until Bruno de Castro received some good news recently, life had not been easy of late. He oversees rural development for the local government in Cacuaco, a small town about 20 miles outside Angola’s capital, Luanda, whose relentless expansion has been eating into the amount of agricultural land. On top of that, the Seco river, which flows through the area, recently flooded, putting dirt-poor subsistence farmers under further pressure,

So it was a welcome surprise for 40-year-old Mr de Castro when SABMiller, the beer multinational, offered a few weeks ago to buy tons of the local output of cassava, a root vegetable similar to the potato or yam, which flourishes in the region and has long been a staple food in tropical regions of west Africa, south-east Asia and Latin America.

“It was a shock because we had only heard [of] beer being made from barley and maize,” says Mr Castro, as he surveys fields where the drooping plant grows wild amid giant baobob trees. “This new project means that people here will grow more cassava and have a guaranteed market. The company is going to buy everything.”

Just a few miles away, SAB has built a state-of-the-art brewery, one of its largest such investments anywhere in the world. On a site carved out of the bush, workers are putting the finishing touches to a $125m (£77m, €86m) facility where production of a new cassava beer is scheduled to begin this year, alongside conventional beers and soft drinks.

With beer and soft drinks markets in Europe, North America and many of the most developed emerging markets already saturated, less developed African countries are increasingly attractive to global drinks groups.

SAB derives about two-thirds of its earnings from emerging markets and has been at the forefront of this trend. Its operations as recently as 1990 were mainly limited to its home market of South Africa, where its Castle lager, for instance, is a well-known and popular brand. Last year – as well as investing in its new Angolan brewery – SAB ploughed $250m into three other new African facilities in Sudan, Mozambique and Tanzania.

New products, such as cassava beer – which is made by adding dried and grated cassava as a starch additive to barley malt – are an innovative element of the push. Beer made with cassava tastes only slightly different from the standard product, but such home-grown ingredients are cheaper than imported maize and SAB plans to charge at least 20 per cent less for the new beer than for its existing brands. This will allow SAB to increase sales to low-income groups for whom its drinks might otherwise be unaffordable. That has already proved a successful strategy in a number of African countries. Eagle, a beer made from sorghum, has been made in Uganda since 2002, where it accounts for 50 per cent of SAB sales.

As Angola recovers from three decades of civil war, the benefits of oil sales to China and growing trade and investment ties with countries such as Brazil, South Africa and its former colonial ruler Portugal are starting to trickle down to poorer consumers. One effect is that consumption of beer and soft drinks is rising especially quickly among the urban poor.

Alongside its commercial ambitions, SAB hopes its new initiative can help this process. Accordingly, Mr Castro and his colleagues are organising some 500 subsistence farmers into a co-operative.

Money earned from a long-term contract with SAB will filter throughout the local economy, as will the wages of about 500 machinists and other workers at the brewery. By training these workers in new skills, SAB will be helping to ease local skill shortages. Angola’s economic recovery has been heavily dependent on tens of thousands of workers imported from China.

But the initiative is far from pure philanthropy. African markets are particularly attractive commercially because potential demand is very high. Although per capita consumption of beer at about six litres per annum is less than one-eighth of the global average, alcohol is popular. SAB estimates that the informal, largely unregulated market is about four times bigger than the formal sector, and that about 4bn litres of artisanal beers, wines and other drinks made from sorghum, millet, palm and other local ingredients, worth about $3bn, are drunk each year.

The problem for the brewers is that African markets are often difficult and expensive to operate in. Because Africa’s industry and agriculture are so underdeveloped, goods ranging from crates and bottles to raw materials such as barley and hops are imported. Roads and basic infrastructure are often poor, which increases the costs of distribution. Ports, such as Luanda, are hopelessly congested and inefficient.

Such factors make imported beer unaffordable for the vast majority of the indigenous population. SAB’s answer is to increase the range of goods it obtains locally.

In Angola, it is already buying most of the glass it uses for bottles from a business set up by Castel, a French drinks company strong in franco­phone Africa, with which SAB frequently co-operates.

SAB has signed long-term contracts to buy crates from a local producer, and a similar kind of agreement is in place to allow it to buy locally produced cans from next year. By 2012, SAB should be able to source most of the sugar it uses in soft drinks from an Angolan producer.

Sam Jerónimo, managing director of SAB in Angola, says such arrangements have other benefits too. He expects the changes to reduce the number of containers it imports from 18,000 a year to between 2,000 and 3,000 annually. “There will be a lot less logistic headaches,” says Mr Jerónimo. “It will save us a lot of hassle and we will significantly reduce investment in working capital.”

It is the introduction of locally grown crops that represents the most far-reaching change, however. By helping to integrate local farmers into the economy, SAB will be expanding the potential market for its own product.

Something similar has already happened elsewhere in Africa: SAB already obtains barley from 12,700 local farmers in Uganda, Mozambique, Malawi, Ghana, Tanzania, Zimbabwe and Zambia. The company expects by 2012 to be involving 45,000 farmers in such schemes.

More important, not only is locally produced cassava going to be cheaper than imported maize, but it is also – if produced in the right quantities – a particularly rich source of starch.

All this means the price of beer can be made much more attractive, helping boost sales in a way that has already happened in Uganda.

Whether cassava beer will be quite as successful in Angola remains to be seen. But the signs are good. Francisco Domingo, who runs a tiny bar in the down-at-heel Luanda district of Sambizamba, is optimistic. Mr Domingo, who sells as many as 25 cases of beer a day at weekends, says his customers are adaptable. “It is a good idea, especially if it’s cheaper,” he says.

Financial Times

Article Categories

AGRA agribusiness agrochemicals agroforestry aid Algeria aloe vera Angola aquaculture banana barley beans beef bees Benin biodiesel biodiversity biof biofuel biosafety biotechnology Botswana Brazil Burkina Faso Burundi CAADP Cameroon capacity building cashew cassava cattle Central African Republic cereals certification CGIAR Chad China CIMMYT climate change cocoa coffee COMESA commercial farming Congo Republic conservation agriculture cotton cow pea dairy desertification development disease diversification DRCongo drought ECOWAS Egypt Equatorial Guinea Ethiopia EU EUREPGAP events/meetings expo exports fa fair trade FAO fertilizer finance fisheries floods flowers food security fruit Gabon Gambia gender issues Ghana GM crops grain green revolution groundnuts Guinea Bissau Guinea Conakry HIV/AIDS honey hoodia horticulture hydroponics ICIPE ICRAF ICRISAT IFAD IITA imports India infrastructure innovation inputs investment irrigation Ivory Coast jatropha kenaf keny Kenya khat land deals land management land reform Lesotho Liberia Libya livestock macadamia Madagascar maiz maize Malawi Mali mango marijuana markets Mauritania Mauritius mechanization millet Morocco Mozambique mushroom Namibia NEPAD Niger Nigeria organic agriculture palm oil pastoralism pea pest control pesticides pineapple plantain policy issues potato poultry processing productivity Project pyrethrum rai rain reforestation research rice rivers rubber Rwanda SADC Sao Tome and Principe seed seeds Senegal sesame Seychelles shea butter Sierra Leone sisal soil erosion soil fertility Somalia sorghum South Africa South Sudan Southern Africa spices standards subsidies Sudan sugar sugar cane sustainable farming Swaziland sweet potato Tanzania tariffs tea tef tobacco Togo tomato trade training Tunisia Uganda UNCTAD urban farming value addition value-addition vanilla vegetables water management weeds West Africa wheat World Bank WTO yam Zambia Zanzibar zero tillage Zimbabwe

  © 2007 Africa News Network design by

Back to TOP