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

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SAB's antecedents can be traced to South African Breweries, which was founded in South Africa in 1895. Its first product was Castle Lager. The company was listed on the Johannesburg Stock Exchange in 1897 and on the London Stock Exchange in 1898. International expansion began in 1910 with the opening of Rhodesian Breweries. In the 1960s, the company obtained licenses from several companies across the world to brew their products locally. These included Guinness of Ireland (1964), Amstel Brouwerij of Amsterdam (1965), and Carling Brewing Company of the USA (1966). In 1967, a new subsidiary was formed, through which it expanded into the food sector. In 1977, SAB sold off its interests in food, hot beverages, and property, with the intention of concentrating only on its core business activities...

SAB operated in Uganda through its subsidiary Nile. In 2001, the operating environment in Uganda was very competitive. The market for beer was stagnating. With the intention of rekindling growth, Nile studied the pattern of alcohol consumption. It found that though that the per-capita consumption of alcohol in Uganda and Nigeria was twice the global average, most of the alcohol consumed was illicit...

To procure sorghum, SAB decided to partner with the local subsistence farmers as it believed in making a long-term and sustainable impact on the poor through its business activities, and by creating a market for the products produced by the poor. This was in tandem with one of the ten sustainable development priorities of SAB - 'Building supply chains that reflect its values and commitments'...

Within a year, Eagle had gained a market share of 30% in the Ugandan beer market. Nile procured 1,600 tons of sorghum in 2002, which grew to 11,600 tons by 2007. Eagle went on to become the company's best selling product in the country. The sales of Eagle Lager and Eagle Extra grew from one million cases per annum in 2003 to four million cases in 2009 and to over seven million cases per annum in 2011...

The success of Eagle in Uganda prompted SAB to start a similar initiative in Zambia. Eagle was launched in Zambia in April 2005. In Zambia, SAB worked with CARE, which had been working actively with the small farmers, helping them by providing financial and non-financial assistance, training, and inputs. SAB entered into agreements with local farmers to procure the crop...

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