A New African Beer Helps Smallholder Farmers

Africa’s growth in the past decade has held steady despite the trauma of the global economic crisis and the tumult of the “Arab Spring” in several countries of North Africa. African economies are growing because of a number of resilient trends. These include growing regional trade links, greater investment in infrastructure and the remarkable rise of China to become Africa’s number one trade partner, pushing the United States to second place (Technology + Policy). This has given birth to a growing consumer marketplace and consumer class – some 300 million people earning about US $200 a month (Africa Rising).

The continent as a whole now stands as the 10th largest economy in the world.

How will Africans spend this new money in their pockets (or more than likely, on their mobile phones)? They could go for the big, famous global brands that they see advertised in magazines or on television. Or they could also spend it on local products and services that seem just as enticing and life-improving. Creating local African products and services with strong brands will have an important knock-on effect of creating new wealth and jobs within Africa.

One new product being introduced to the West African country of Ghana’s thirsty beer drinkers is the Eagle beer brand. But this is not just any beer made from the traditional ingredients of water, hops, malted barley and yeast (http://en.wikipedia.org/wiki/Beer) – it is brewed from the root vegetable cassava.

A staple of many African diets, cassava (http://en.wikipedia.org/wiki/Cassava) is a starchy, tuberous root vegetable and a common crop across the continent.

It is believed that 70 per cent of Ghana’s farms are just 3 hectares in size or smaller. They grow many things, but cassava is the most common crop.

Cassava soon spoils once it has been harvested and needs to be consumed quickly. Currently, too much of it goes to waste. In Ghana, according to The Guardian, there is an annual surplus of some 40 per cent of cassava produced.

The Accra Brewery Limited (ABL) (http://www.sabmiller.com/index.asp?pageid=1156) decided to find a way to put the cassava from smallholder farms to good use and stop the waste. The brewery had observed the success of parent company SABMiller (http://www.sabmiller.com/index.asp?pageid=27) elsewhere in Africa, in turning cassava and the grain sorghum from smallholder farmers into beer. Farmers had directly benefited from the purchase of their surplus product.

Eagle brand cassava beer is creating opportunities for business, consumers and smallholder farmers in Ghana. According to The Guardian, the company hopes to source cassava from 1,500 smallholders.

By having a guaranteed purchase from the brewery on a regular basis, farmers are able to move beyond subsistence agriculture and turn themselves into functioning businesses.

The spare income from selling the cassava also can be used to improve a farmer’s household access to healthcare and education.

The Accra Brewery provides advice on agricultural techniques and growing a diverse range of crops, to ensure farmers are not dependent on a monocrop harvest. It also offers advice on business and developing commercial relationships.

The Eagle brand cassava beer will be sold at a 30 per cent discount to low-income drinkers in order to lure them away from illicit and informal alcohol drinks of dubious quality.

Professor Ethan Kapstein of business school INSEAD found that ABL and its water business Voltic (GH) Ltd. was a creator and supporter of high-quality jobs in Ghana and supported 17,600 jobs throughout the Ghanaian economy.

Adjoba Kyiamah (http://www.sabmiller.com/index.asp?pageid=1766&blogid=172), corporate and legal affairs director at Accra Brewery, told The Guardian she believes Eagle brand beer will help create even more jobs, boost government revenues and expand consumer choice.

This is an innovative first, as cassava beer had never been made before in Ghana on a commercial scale. This had not been possible in the past because of the challenge of collecting fresh cassava from farms widely spread out over a large territory. As well as spoiling quickly, Cassava is heavy, being mostly made up of water, and is difficult to transport over large distances.

“Part of our strategy across Africa is to make high quality beer which is affordable for low-income consumers while simultaneously creating opportunities for smallholder farmers in our markets. The launch of Eagle in Ghana ticks both these boxes,” said Mark Bowman, Managing Director of SABMiller Africa.

“Eagle is aimed at attracting low-income consumers away from illicit alcohol. This is a virtuous circle: smallholder cassava farmers have a guaranteed market for their crop, which is then used to make consistently high quality, affordable beer for consumers; and the government realises increased revenues as people trade up into formal, taxable alcohol consumption.”

ABL is using a mobile processing unit developed by DADTCO (Dutch Agricultural Development and Trading Company) Cassava Processing Ghana Ltd. It is designed to process the cassava on site, preserving the integrity of the starch.

Eagle is sold in 375 millilitre bottles at a price 70 per cent lower than that charged for other lager beers. The use of local ingredients, and a reduced excise tax awarded to the brand because is it is boosting local agriculture, allows for the lower price.

Production of cassava beer got its start first in Mozambique, with the launch of the Impala brand (http://www.sabmiller.com/index.asp?pageid=149&newsid=1748), the first commercial-scale cassava-based clear beer, in October 2011.

By David South, Development Challenges, South-South Solutions

Published: April 2013

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Brewing Prosperity Creates Good Jobs

 

In the Democratic Republic of Congo – home to the world’s largest United Nations peacekeeping mission and decades of bloody civil war – a brewery has not only survived, it has thrived to become a popular brand throughout central Africa. By being a success, the Brasimba brewery has brought prosperity and high-quality jobs to Congo’s second largest city, Lubumbashi (http://en.wikipedia.org/wiki/Lubumbashi), and proven that a modern business can do well there despite the obstacles.

The Brasimba brewery has an ultra-modern factory (http://www.viddler.com/explore/kaysha/videos/298/) complete with high-tech laboratories to constantly test the quality of the beer. It employs 700 people – most of whom are Congolese – and produces 250,000 bottles of Simba beer every day, according to Monocle magazine. The company’s beer brands are Simba Biere du Lion and Tembo Biere and its slogan is a proud Notre Biere (Our Beer).

Lubumbashi is a city described by the BBC as without “child beggars, without potholes and where there are no festering mounds of rubbish.”

A study of the economic impact of breweries in Uganda and Honduras found that more than 100 local jobs, from farmers to truck drivers, depended on every person employed by a brewery (http://www.inclusivebusiness.org/2009/10/sabmiller-impact-assessment.html). Markets across the South are seen as growth areas for beer companies: China’s beer consumers now outnumber those in the U.S. By 2003, world sales of beer reached 148 billion hectolitres (Euromonitor). Overall, it is forecast that global beer consumption will rise by 3.5 percent by 2015, mostly in the South.

Apart from creating steady employment, breweries also help to improve the development of the advertising and marketing businesses of a community as they promote their various brands, and they support local activities like sport with team sponsorship. They also offer a local example of how to run a modern beverage business, with mechanized production, distribution systems and laboratories to ensure hygiene and quality standards are maintained.

Brasimba has been operating in Lubumbashi for eight decades, through the twists and turns of the country’s history. The city has prospered from its copper mines and wisely used that wealth to improve the city’s general prosperity.

The brewery has successfully become a regional favourite, producing beer that is drunk not only in the surrounding Katanga province, but also in Zimbabwe and Zambia. It’s an impressive accomplishment for a company operating in such a turbulent environment. Distribution of the beer by truck is not easy, with the trip taking between six days and two weeks depending on the weather and the condition of the roads.

And the beer is not cheap, at around US $1.48 for a big bottle — a sure sign there is money to be made.

The healthy economic environment has also spawned a beer war with rivals Bralima, owned by the multinational Heineken. With five breweries in Congo and its head office in the capital Kinshasa, Heineken claims the lessons it has learned in Congo are helping it to change its marketing and business strategies far away in the United States.

It recently transferred its commercial director of Congo operations to head up operations in the United States. Heineken Chief Executive Officer Jean-Francois van Boxmeer told the Bloomberg news agency that working in Africa was “certainly worth three times Harvard Business School.”

Heineken’s market share doubled in the Democratic Republic of Congo in just four years and Africa has become a significant market for the brewer.

By David South, Development Challenges, South-South Solutions

Published: December 2009

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

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