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

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.

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:

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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