Emerging Markets Roundup: Africa

SABMILLER MAKES MORE AFFORDABLE LOCAL BEER

 

By Antonio Guerrero

 

The UK’s SABMiller, the world’s second-largest brewer, plans to invest up to $2.5 billion in Africa over the next five years to build new breweries and revamp existing ones to meet increasing demand on the continent.

 

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In Africa beer made from cassava is relatively inexpensive

It plans to build two or three new breweries in Africa each year. Using local and less expensive ingredients, including cassava and sorghum, the firm offers affordable beer for African consumers, who often consume poor-quality home-brewed beer because of price sensitivity. SABMiller launched its first cassava-based beer in Mozambique last year, with a price point that is 25% lower than traditional beer.


Brazilian investors have quietly made inroads into Africa. Bilateral trade between Brazil and African countries soared from $4.3 billion in 2002 to $27.6 billion in 2011. Foreign portfolio and direct investment are also growing. Brazil’s BTG Pactual investment bank, for example, launched a $1 billion Africa-focused private equity fund—the largest in the region—and Brazilian mining company Vale, which has already invested $7.7 billion in nine African countries, plans to invest another $8.2 billion in coal mining and rail operations in Mozambique.

 

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