Companies doing business in Africa are expected to promote sustainability and support the local economies in which they operate. Diageo and SABMiller, both with London headquarters, are doing a lot more than making beer in Africa. They’re growing their own ingredients locally — or plan to — cutting down on imports and even talking about getting into exports. It’s supporting agriculture in Africa and it’s good for profits. Beyond Beer: what SABMiller and Diageo are doing in African agriculture.
South African Breweries (SAB), a subsidiary of SABMiller, is investing more than $58 million in a maltings plant in Alrode, Gauteng in South Africa. After it is completed in 2015, the plant is expected to produce 130,000 tonnes of malted barley per year. Malted barley is the source of the sugars that are fermented into beer. The malting process allows the grain to partially germinate, making the seed’s resources available to the brewer.
Source: Sab.co.za HowToBrew
The new plant should mean SAB needs to import less barley into South Africa, thereby reducing competition for local farmers with foreign suppliers. SAB helped establish South Africa’s barley growing sector back in the 1970s as a strategic initiative to become self-sufficient in this key brewing ingredient, according to SAB. Since then, the industry has expanded significantly, with around 160,000 tons grown in the Southern Cape and a further 64,000 tons produced in the Northern Cape.
The money that SAB saves by avoiding what it describes as “volatile international markets,” it will invest into the local barley market. The plan is to potentially source between 90 percent and 95 percent of its barley from local farmers.
More ways the new SAB plant hopes to improve the local economy is by employing local construction workers to build it, and local industries’ technologies to run it.
SAB started a Barley Breeding Programme in which it worked with local farmers to develop competitive local barley varieties, according to its website. So the barley market won’t be dominated by one type of barley and farmers from various regions can partake. Farmers in Limpopo and the North West have already taken part in the program.
Since SAB is controlling where it gets its ingredients, it says it will be able to use GMO-free yellow maize, hops, apples and grapes and deliver a healthy drink to locals, whether that is beer or other beverages.
Beverage company Diageo, which sells beer, spirits and other drinks in more than 40 African countries, has signed letters of intent to begin projects in Ethiopia and Tanzania that will help local agriculture.
Diageo plans to invest $1.5 million in what it describes as a scalable barley farming project in Sebeta, Ethiopia, and $2 million in a scalable sorghum value chain project in Mogoro, Tanzania.
Diageo’s interest is both financial and environmental. It will save money through avoiding import fees but the company also wants to source “local, sustainable…agricultural raw materials.” Diageo hopes to increase its sourcing of local materials from 50 percent to 70 percent.
In Ethiopia, Diageo will not only use locally sourced materials to make beverages, but it also hopes to export some of those materials as well as a way of introducing local farmers to the international market.
In Tanzania, Diageo plans to offer training and “financial and physical infrastructure” to local sorghum farmers, according to Diageo.com. Diageo also hopes to promote sustainable post-harvest practices throughout Tanzania.
Diageo has worked with more than just beer: the company began the Water of Life Programme in 2000 through which it has paid for 170 water and sanitation projects, helping almost 5 million people in 16 countries.