SABMiller lures the home-brew consumer
"The average African worker must work three hours to earn enough to buy a 500 ml beer; in Europe only 12 minutes of work is required."
The African home-brew market is highly lucrative. According to Trevor Stirling, drinks analyst at Sanford C Bernstein, it is valued at US$10 billion per annum and comprises a quarter of the beer market. And it is this market that SABMiller, one of the largest brewers in the world, has targeted for many years. But the challenge they are facing is that according to their own calculations, “The average African worker must work three hours to earn enough to buy a 500 ml beer; in Europe only 12 minutes of work is required”. So they have to provide cheaper alternatives to home-brews. Home-brewing tradition Beer drinking is very much part of African culture. Beer is not only imbibed as a beverage, but plays a large role in communal festivities and religious traditions. Home-brewing is the traditional way of producing it and this practice continues today not only in rural areas, but also in townships and informal settlements all over Africa. Home-brewing provides beer that is very cheap since local produce like sorghum or maize is used with an added grain malt to start the fermentation process. Home-brewing is mostly done by women. Since beer plays such an important role in Africa, the role as brewer gives women a degree of social and economic standing. It is thus understandable that this market is fiercely protected. In South Africa, for the most part of the previous century, the government tried to stop women brewing in townships. Women counteracted by breaking out in violent riots and stormed government beer halls, chased out the customers and destroyed the beer. In 1959 it spiralled out into countrywide demonstrations. These women were fighting for an income and their respect in society. But home-brewed beer is not always a pretty story… Health risks of home-brews As early as 1991 studies were published that showed that contaminated grain that is used to make home-brews are associated with severe health risks. Sorghum and maize often are contaminated by mycotoxin molds that have the potential for both acute and chronic health effects via ingestion, skin contact, and inhalation. These effects are compounded by poor nutrition, alcohol abuse and other infectious diseases. Forty-five per cent of home-brewed beers showed the presence of mycotoxins. The Transkei region of South Africa has a very high incidence of oesophageal cancer. Research by the Medical Research Council in South Africa has suggested that a toxin-producing fungus in home-grown maize could be linked to the high incidence of this cancer. This is again linked to the popular local home-brew umqombothi. How to provide cheaper beer? To lead the home-brew consumer and also the rising middle class into the formal beer market a gentle approach was required – SABMiller had to provide cheaper beer. Speaking to the spokesman for SABMiller, How we made it in Africa was told the brewer could only do it by engaging local governments and by using local produce. The advantages for local governments are obvious. Beer sales increase tax revenue and the production process in more breweries provide employment. SABMiller admits that it has negotiated reduced duties with local governments. One would assume that for local governments the cut-price tax deals would be balanced by the increase in revenue. Costs are reduced by buying the inputs for brewing from local farmers. This leads to the economic empowerment of farmers; from subsistence farming to planting cash crops (maize, sorghum, cassava) that is bought by SABMiller. SABMiller likes to point out that previously mentioned health risks are a concern and it is assumed that this would have been discussed during negotiations with the relevant governments. By weaning consumers from the unhygienic and often risky home-brews these dangers would be prevented. Cheaper beers In 1999 SABMiller acquired Zambia’s National Breweries and started to produce Chibuku, a traditional opaque beer. It is made from locally grown sorghum and maize. Because of its resemblance to home-brews it resonates with the home-brew consumer. Chibuku continues to ferment after it has been packaged due to the presence of yeast in the beer. Chibuku starts off as 0.5% alcohol by volume (ABV) and reaches 5% ABV after a few days. Mainstream Chibuku is packaged in a 1 litre carton. Drinking Chibuku creates its own ritual. In order to mix the grainy content, you must put your finger over the valve at the top, give it a good shake (devotees call the drink 'shake-shake'), then the top of the carton is cut open and the foaming drink is shared. SABMiller sees Chibuku as the entry point for low income consumers with the hope that they would later move up to more premium beers. Due to the short shelf life of Chibuku, not more than seven days, Super Chibuku has been developed and comes in a 600 ml plastic bottle with a 21-day shelf life. In 2011 SABMiller launched Impala, the first commercial-scale cassava-based clear beer in Mozambique. Cassava is a root vegetable that grows in tropical and subtropical Africa. After it has been identified as a possible base for beer-brewing it took years of research and innovation to overcome the challenges of processing cassava, which is a highly perishable root. For this project SABMiller has partnered with the Dutch Agricultural Development and Trading Company (DADTCO). The problem was solved with mobile units that travel to the farmers in a 100 mile radius around their brewery in northern Mozambique. The cassava is processed into a pulp that can be used for around six months as opposed to 24 hours for unprocessed cassava. It is expected that the cultivation of raw cassava that will be used in producing Impala, will create employment for over 1,500 smallholder farmers. Impala is sold at between 25% to 30% less than mainstream lagers. Chibuku is even cheaper.
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By producing cheaper beers that look like home-brews and lagers from familiar grains and roots, SABMiller has managed to swing many consumers to the formal market.