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African roots create market for SABMiller

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With the introduction of the first commercially produced cassava-based beer in Mozambique, SABMiller aims to increase its footprint in the relatively untapped home-brew beer market in Africa, which could be four times the size of the traditional market.

Almost half the alcohol made on the continent outside SA was made at a “subsistence” level, CEO Graham Mackay said on Tuesday at a Johannesburg Press conference launching the product. It was a market that paid no tax and had no quality control, he said. “We were always looking for new markets and opportunities.”

The price of mainstream beer offered by brewers on the continent such as SABMiller and the UK’s Diageo means it is largely inaccessible to a large segment of alcohol consumers and is seen as a luxury purchase.

According to the United Nations, at the end of the 20th century, there were 315 million Africans living on less than $1 a day, which could increase to 404 million in the next four years.

Mainstream beer on the continent costs about $1, while homebrews can cost 85% less.

The informal market had “enormous untapped potential”, Simon Hales, analyst at London-based Barclays Capital, said yesterday. “Your usual lager beer in the usual form is still too expensive,” he said.

SABMiller will brew its Impala beer in Mozambique with local subsidiary Cervejas de Mocambique. “We hope the Impala brand gets about 10% of the market share eventually,” MD of the brewer’s Africa unit Mark Bowman said. “An attractive price is important.”

The beer will sell for 75c for a 550ml bottle, compared with the average price in Africa of $1 for an equivalent unit.

The brewer first invested in its Mozambique partner in 1995. Average per capita consumption of beer in the country is around 8l a year, against 60l in SA.

Impala is brewed using 70% cassava, a root vegetable that grows widely on the continent.

SABMiller will make use of the locally-grown starch, which will be much cheaper to use than importing alternatives such as maize, Hales said.

“It also enables them (SABMiller) to partner with local farmers and that wins favour with local authorities.”

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