European beer colossus has plans for Africa

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SABMiller is looking to the relatively untapped African market to help drive future growth.

SABMiller is looking to the relatively untapped African market to help drive future growth.

FORT WAYNE – As African nations struggle with rising numbers of alcoholics drawn to the drink’s low prices and higher alcoholic content, a juggernaut of European brewers is planning to introduce more suds to vulnerable African populations.

SABMiller, second largest brewer in the world, has been developing a strategy to make beer more affordable. The largest brewer on the African continent, now based in the UK, it has been buying up local African brands, ranging from the more affordable Chibuku Shake Shake in Malawi and Eagle in Uganda, Tanzania, and Zimbabwe to such premium brands as Nile Special and Mosi. Now the company plans to create even more affordable brews using locally sourced ingredients such as cassava — a root vegetable that yields a rich starch — in place of more expensive imported alternatives such as maize.

“It is an entirely logical move, given that a large segment of the population in Africa may not be able to afford commercially brewed beers as often as they’d like,” said Kim Slater, director of consulting at beverage market research firm Canadean in Basingstoke, Britain.

Low-income consumers have traditionally made home-brewed beer from local ingredients. But with no regulation of this so-called informal beer market, drinkers “can be taking their life in their hands,” said Gerry van den Houten, now with the Dutch Agricultural Development and Trading Company.

SABMiller estimates that the home brew market is worth more than $3 billion (about M41 billion) in the African countries where it currently operates — potentially four times greater than the beermaker’s current sales there.

“There is an enormous informal alcohol market in Africa,” said one expert with SABMiller. “We hope to access much of that market by producing a commercially brewed beer at 50 percent to 60 percent of the cost of standard lager by using locally sourced ingredients.”

This week, the Belgian-based AB InBev, the world’s largest beer maker, announced plans to approach SABMiller, the world’s second-largest beer maker, with an offer to buy the company. Both companies are flush with cash: AB InBev had $47 billion in revenue in 2014, while SABMiller brought in $22.1 billion.

The deal would bring all of the following brands together under one roof: Bud, Bud Light, Corona, Michelob, Stella Artois, Becks, Hoegaarden, Leffe, Coors, Coors Light, Grolsch, Icehouse, Keystone, Milwaukee’s Best, Blue Moon, Foster’s, Pilsner Urquell, Peroni, Miller Lite, and of course the champagne of beers, High Life.

Alcohol consumption is likely to increase, as seen in South Africa, one of the world’s heaviest drinking nations. The wealthier demographic, the so-called rising Africans, will have the means to cope with it, but the rest—those referred to by Oxford economist Paul Collier as “the bottom billion”—might not.

Concerned observers say at least, generous tax breaks once given to beer companies are now being withdrawn. GIN

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