How the launch of a new beer brand impacted a country
Friday, June 12th, 2015
After several years in development, our fellow SABMiller subsidiary in Uganda, Nile Breweries Limited, has achieved groundbreaking success in a local agricultural empowerment project. Nile Breweries Limited (NBL) launched a new commercial beer brand, Eagle, and with it, invested in developing local farmers.
Over a decade ago, NBL was importing 100% of its raw materials to produce the country’s beers. Through its Local Enterprise and Agriculture Programme (LEAP), over 70% of the raw materials in their beers are now locally grown.
This has been more than a simple substitution. The LEAP process has involved a close partnership with the Ugandan government, a research agency and farmers.
The results have been overwhelmingly positive
- New improved practices in sorghum farming and brewing have been established
- Farmers have been empowered to use their land more profitably and with improved agricultural practices
- NBL established a sustainable raw materials value chain, giving farmers a reliable market in which to sell their crop
- NBL created a portfolio of affordable beers, replacing the consumer need for illicit and often dangerous alcohols.
Eagle Lager, Eagle Extra & Eagle Dark now constitute 50% of the NBL brand portfolio, and Nile Breweries’ market share is up from just above 40% to nearly 60% in a competitive market.
Investing in local farmers
To start this off, NBL invested in the technology and infrastructure to produce a beer brand using locally grown raw materials.
This win-win situation would mean that local farmers, instead of overseas suppliers, would benefit from the income, while the cost of beer would also be reduced in comparison to those made from imported materials. These changes were not without their challenges, and an entire programme, From Grain to Glass, was launched to holistically empower the farmers involved. Some of the challenges included:
- The grain would need to be of a SABMiller standard. This meant that alterations were made in the brewing process and equipment required.
- A supply chain infrastructure had to be developed from scratch, as farms in Uganda are typically smallholdings of 1 acre or less.
The From Grain to Glass initiative
NBL wanted to partner with the farmers not just for them to earn income from sorghum, but also to use it overcome poverty and disease in the country. In addition, the farmers needed information, and knowledge that would empower them to make the social behavioural changes to make them less prone to poverty and diseases.
The supply chain developed once we recognised these informal farmers as critical partners in NBL’s growth. The programme addressed many areas of basic needs in order to empower them.
- Organisation skills
- Agricultural practices
- Health awareness (HIV/AIDS included)
- Clean water
- Environmental protection skills
- Education scholarships
The From Grain to Glass improvements supported the Ugandan governments existing initiatives to alleviate poverty through rural and health development.
Innovating with sorghum
Sorghum, a locally grown crop in Uganda, was identified as a replacement raw material to produce the new beer. With the expertise of researchers from the National Semi-Arid Resources Research Institute (NaSARI) Epuripur, a white sorghum, was identified as an excellent variety for beer.
Naturally the brewing process had to be reconfigured to get the best out of this new brewing ingredient. This was a challenge, overcome through investments in new technology, such as a mash filter, that could handle this type of material.
Epuripur is not only exclusively a cash crop, but is also better yielding and more drought resistant than traditional sorghum. Farmers grow traditional sorghum for food demands alongside Epuripur.
Improved farming practices, including proper soil management, have also helped to improve the annual production of the crop.
Annual production of Epuripur has risen from under a ton in 2002 to 12, 000 tons in 2014. That’s more than twelve-fold in twelve years!
Establishing a reliable supply chain and market for farmers
Establishing a supply chain for thousands of farmers was no mean feat. A local agency was appointed to collect the harvest from farmers, clean it and deliver it to the brewery.
This agency also gave the farmers the seeds to grow Epipur under contract, which helped elevate their business to commercial farming and ensure better income.
To further raise yields NBL in collaboration with Enterprise Uganda encouraged farmers to form associations for organised production and marketing of their crop. Best practice was then introduced and allowed seamless training for the farmers. NBL also connected them to other partners like credit institutions and input suppliers to strengthen capacity.
Today, the backbone of the programme remains the farmers and farmer associations, and more than 20, 000 Ugandan farmers are supplying NBL with sorghum.
- Empowered local farmers
With improved skills, income and productivity, the farmers’ living standards have improved, with better housing, access to health, education and improved food security.
- Women farmers
By encouraging women to form and lead farmers groups, the results were impressive:
- Women lead 50% of the top 10 farmer associations that supply sorghum to NBL
- 30% of farmers operate under the women-led groups
- 23% of the sorghum crop is supplied by women-led groups
- 26% of income paid by NBL to sorghum during 2014 went to women-led groups
- Direct employment
Direct employment is fast approaching 1, 000 jobs, an increase from 300 before the Eagle project launched. Indirect employment is currently at 180, 000.
- Encouraging responsible drinking, away from illicit alcohol
By creating a new, more affordable beer brand for the country, NBL has provided lower-income consumers with an affordable beer that is safe to drink (a trade up from illicit alcohol).
Before this initiative, alcohol consumption in Uganda was dominated by unregulated and dangerous Illicit brews. This change has come about through a holistic approach, benefiting not only SABMiller’s business but Ugandan society at large. It is a great example of Public Private Partnership at work, and has become an example to the SABMiller business.
The initiative has now been replicated in Ghana, Mozambique, Tanzania and Zambia. South Africa’s Go Farming initiative, where we’re investing in local barley farmers, echoes the Ugandan strategy. Find out more about it here.