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

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The success that it achieved in making beer from sorghum encouraged SAB to explore the possibility of using cassava to make beer. Cassava, a root vegetable, was widely grown in Africa, and was the staple food in the region. SAB entered into contracts with the farmers in Mozambique and in Angola to grow cassava. Though cassava was widely grown in Tanzania, there were some problems associated with using it. It had high water content and deteriorated rapidly after harvesting. Within three days of the harvest, the tuber perished. This made it unsuitable for long haul transport, presenting a huge logistical problem. The problem was compounded by the challenge posed by inadequate infrastructure in several countries...

In India, SAB wanted to ensure the supply of high quality barley for its rapidly expanding business. The barley produced in India was of feed-grade and the yield was also low. The farmers were not willing to plant barley in their fields due to low returns and the low price it yielded. SAB India, realizing the need for high quality barley, partnered with its maltster Cargill started to support the development of high quality barley malt in order to supply to its ten breweries...

According to analysts, SAB could face challenges in its model of targeting BoP customers. They were of the view that convincing consumers of locally brewed hooch to switch over to a more expensive alternative could prove to be a challenge. They felt that the price needed to be reduced further to make commercial beer affordable. To cut down the price, SAB needed to address issues like packaging, which sometimes accounted for more than half of the total production cost. SAB started to experiment with plastic bottles and less labeling to reduce the costs associated with packaging...

Analysts were of the view that the model followed by SAB was scalable and could be used in any developing or underdeveloped country, for different products. They were of the view that SAB's initiative showed how a company could, through its core business operations, have a positive poverty reducing impact. It also brought forth the role that the private sector could play in poverty alleviation in third world countries...

Exhibit I: SABMiller Acquisitions
Exhibit II: About Uganda
Exhibit III: About Nile Breweries
Exhibit IV: Bottom of the Pyramid
Exhibit V: SABMiller - Ten Sustainable Development Priorities

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