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

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"The business strategy is to create more affordable products. That's good for Ugandan farmers since it expands the market for their products, and it's good for SABMiller because we sell more beer. It shows how we can grow our business while creating local economic benefits." ¹

-Andy Wales, Head of Sustainable Development, SABMiller, in 2009.

"We have all gained from Nile Breweries' commitment to working with us to develop value-added agriculture through local sourcing from thousands of Ugandan farmers. I encourage other leading global companies to see this as a model for how to partner locally to advance economic growth." ²

-Hope Mwesigye, Uganda's Minister of Agriculture, Animal Industry and Fisheries,in 2009.

"Brewers like SABMiller provide a good example of how new products can be developed that make intensive use of local agriculture, and they also suggest the promise of new investments in this sector to spur the region's continued economic growth along with increases in the incomes of its farmers." ³

-Ethan B. Kapstein, Paul Dubrule Professor of Sustainable Development at INSEAD,in 2010.

In November 2011, the world's second largest brewer, SABMiller Plc. (SAB), introduced a new beer 'Impala' in Mozambique, South-eastern Africa. The product was unique as it was made with cassava,4 a locally available tuber, and was priced 25% lower than the barley-based beer. The beer was launched with the aim of providing consumers at the Bottom of the Pyramid (BoP), with an affordable, high-quality product. According to Mark Bowman (Bowman), Managing Director, SAB, Africa, "What we're trying to do is at a 75 percent price point, to attract consumers up from the illicit spirits or the home brews that they would tend to be consuming.5" The launch of the cassava-based beer followed the thumping success of the sorghum6 -based beer, Eagle that SAB's Ugandan subsidiary, Nile Breweries (Nile), had introduced in Uganda in 2002.

Eagle was launched after SAB found that the products it sold in Uganda were beyond the reach of about 60% of the people. Due to the high cost of the beer, the people were not able to afford beer from the mainstream market. This made many communities in the country resort to brewing their own alcohol using locally available ingredients. Often, chemicals like methanol were added to increase the alcohol levels. This made the resulting drink unhygienic and unsafe.

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1] "SABMiller - The Cost-Benefit Analysis of Beer," www.ethicalcorp.com, September 29, 2009.
2] "INSEAD Report on SABMiller Operations in Uganda," www.sabmiller.com, June 12, 2009.
3] The East African Community, www.sabmiller.com, May 2010.
4] Cassava is a root vegetable and is a primary or secondary staple in several African countries.
5] "First Commercial Cassava Beer Rivals African Homebrew," AFP, November 01, 2011.
6] Sorghum or Sorghum Vulgare belongs to the Gramineae family. It refers to several grasses grown across the African continent. Some of the varieties are grown for grain and a few for fodder. Sorghum can survive droughts and high temperature.

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