SABMiller's Nile Breweries: Creating Value with the Base of the Pyramid in Uganda

            
 
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Case Details:

Price:

Case Code : BECG121 For delivery in electronic format: Rs. 300;
For delivery through courier (within India): Rs. 300 + Rs. 25 for Shipping & Handling Charges

Themes

Globalization / International business
Case Length : 15 Pages
Period : 2001-2011
Organization : SABMiller Plc.
Pub Date : 2012
Teaching Note : Not Available
Countries : Uganda, Zambia, Tanzania, India
Industry : Beverage/Brewery

Abstract:

The case is about the initiatives taken by the world's second largest brewer, SABMiller, to target customers at the Bottom of the Pyramid (BoP). Faced with a highly competitive environment in Uganda, the company's subsidiary, Nile Breweries (Nile), started scouting for opportunities among the poor in the country. It found that consumption of illicit alcohol was rampant and that the unregulated alcohol market in Africa was about four times the formal market. People resorted to consuming illicit brews as the products in the mainstream market were priced high and were beyond their reach. As 60% of the population was from the BoP segment, SAB intended to reduce the price of beer.

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The main reasons for the high price of beer were the need for imported ingredients like barley, the time consuming brewing process, and high excise duties. Nile found ways to make beer using the locally available ingredient, sorghum. For procuring sorghum, it partnered with local subsistence farmers. Citing its involvement with small farmers, the company obtained excise concessions. It also came out with a brewing process which saved time and was inexpensive. Thus it was able to introduce a beer - 'Eagle' which was priced at two-thirds the price of beer made out of barley. Eagle was highly successful in Uganda and went on to become Nile's best selling product in the country. Thousands of farmers also benefited from the association as they had an assured income, which helped them plan their future. SAB replicated the model in other countries too. In Mozambique, it launched a beer made out of a locally available root, Cassava. In India, it entered into partnerships with farmers to ensure a regular supply of high-quality barley. The case discusses SAB's initiatives to make people at the BoP a part of its value chain and the mutual benefit that the parties involved have derived from the association. It also discusses the replicability and scalability of the model.

Issues:

Study how SABMiller developed products to cater to the needs of the BoP segment.
Understand the concept of Building a Fortune with the BoP.
Analyze the challenges in dealing with the BoP segment.
Understand how companies can develop a mutually profitable relationship with the BoP customers.
Examine if the model adopted by SAB is scalable and replicable.

Contents:

  Page No.
Introduction 1
Background Note 2
Finding New Avenues of Growth 3
Creating Value with the BoP 5
Mutually Beneficial Partnership 6
Replicating the Model 7
Using Cassava 8
Growing Barley in India 8
Challenges 9
Looking Ahead 10
Exhibits 11

Keywords:

Bottom of the Pyramid, Base of the Pyramid, Fortune at the Bottom of the Pyramid, Fortune with the Bottom of the Pyramid, Africa, Mutual value creation, Sustainable development, SABMiller, Illicit spirit, Cassava-based beer, Sorghum-based beer, Farmers, Nile Breweries, Local communities, Responsible alcohol consumption, Agricultural development, Affordable products

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