HomeBusiness DigestSABMiller sees future in traditional brews

SABMiller sees future in traditional brews

A FEW years ago, then Delta Beverages CEO Joe Mutizwa spoke of sexing up the company’s products — beer, carbonated drinks and even opaque beer.

Chris Muronzi

Among some of the notable changes to the products was the packaging for carbonated drinks and the re-introduction of the “shake-shake” opaque beer.

The challenge when the industrialist spoke of the planned make-overs and other things he deemed would position his company as a market leader, was convincing cynical market analysts, who felt there was no need to pimp any of his products.

They strongly felt customers did not care whether beer came in white bottles or blue ones.

The market had at that time not remotely considered a return to the plastic-coated shake-shake in place of the brown recyclable plastic containers, known as “scuds”, for traditional beer.

The shake-shake, once a famous brand among Delta’s low-end consumers, had been replaced by the scud.

The revolutionary scud packaging came in 1991 at about the time of America’s Operation Desert Storm in Iraq. Scud missiles were Iraqi long-range ammunition fired mainly at American ally Israel during Desert Storm and came from the former Soviet Union.

As if not to be outdone by his predecessor new CEO, Pearson Gowero has presided over the launch of another revolutionary product; the carbonated opaque beer in smaller, neater and branded one-litre polyethylene terephthalate (Pet) packaging.

While, traditionally, low-end customers had generally complained over the stomach-filling scud which sometimes forces guzzlers to quit before they feel they have had one too many, the new carbonated Chibuku beer solves earlier hygiene problems associated with the scud and beats the shake-shake as well.

Buoyed by the success of the new Super opaque carbonated beer, Chibuku management last week said the company would seek to invest more than US$6,5 million in a new plant in the coming year to meet growing demand for the product.

This comes after the company commissioned a US$6,5 million carbonated sorghum beer plant this year with capacity to contribute US$10 million in annual revenues at current production rate of one million litres, packed in Pet bottles per month.

Moreover, the new product has a longer 21-day shelf life compared to the regular Chibuku which has a three-day shelf life.

Chibuku boss Mark Mudimbu says the current capacity appears to be short of market demand after registering more than 60% capacity utilisation in the first three months of operation.

“We have not yet satisfied the market so we need to do this as soon as we can. We have been operating for three months and we are now beginning to feel the need to invest in extra capacity,” Mudimbu said, adding the new investment is likely to be more than the US$6,5 million.

Mudimu said the new Chibuku Super plant had produced three million litres, which is packed into one-litre bottles using latest technology acquired from Germany.

Although his company is not operating at full capacity yet, he believes planning ahead would help anticipate demand and supply the market fully in the coming year.

Chibuku has 15 breweries in the country with distribution in three cities of Bulawayo, Harare and Mutare. The company is more flexible in terms of distribution because Delta’s former rival in the opaque brews — Rufaro Marketing — is almost out of business.

Last year alone, Delta spent US$85 million, a figure representing 50% of earnings before interest, taxes, depreciation and amortisation (Ebitda) and is targeting to spend 30% of Ebitda as capital expenditure in the current financial year.

Analysts say the move by Delta to expand its traditional beer business is largely in line with the company’s majority shareholder, SABMiller Plc, who last year announced it had expanded its African beer brand, Chibuku, into 10 countries across the continent.

Chibuku is an opaque beer based on traditional African recipes using maize or sorghum, depending on local tastes.

The expansion of the brand more than doubled the number of Chibuku markets from four (Botswana, Malawi, Zambia and Zimbabwe) at the start of 2011.

SABMiller’s investment of US$16 million was expected to lift Chibuku volumes across new markets in Africa to over half a million hectolitres.

Sold in 10 one-litre cartons, Chibuku is a low-alcohol beer that ferments in the package with alcohol strength increasing from 0,5%ABV on day one up to 4% ABV on day five before expiry. Given its short shelf life, it must be brewed and consumed locally.

A new variant, Chibuku Super has been launched in Zambia in September. Chibuku Super is lightly carbonated, pasteurised — meaning it has a fixed alcohol content of 3,5% ABV — and sold in PET packaging. Its longer shelf life means the distribution model for Super is closer to that of clear beer.

SABMiller said following successful pilot schemes in Ghana, Mozambique, Swaziland and Tanzania, full-scale Chibuku production has now been launched in each of these countries. A pilot project was also launched in Lesotho and in Uganda a brand new plant was being planned as part of the new brewery under construction in Mbarara.

The group’s expansion of Chibuku was part of a strategy to make more affordable beers for lower-income consumers across Africa taking share from the often unsafe “informal” alcohol market.

Illicit drinks have been on the market particularly in remote and rural areas where many have died after consuming such beverages while the cities are now flooded with cheaper spirits whose potence is sometimes fatal.

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