---------- Forwarded message ---------- From: John Ashworth <[email protected]> Date: Tue, Nov 6, 2012 at 9:07 AM Subject: [sudan-john-ashworth] Breweries: Refreshing parts that others have not reached To: Group <[email protected]>
Breweries: Refreshing parts that others have not reached South Africa and Africa FT Special Report November 5, 2012 7:15 pm By Katrina Manson When Ian Alsworth-Elvey took on the mission to set up South Sudan’s first brewery, he moved into a tent. For nine months and at $320 a night. The South African country manager of South Sudan Beverages, an SABMiller subsidiary, shrugs off the hardships of moving to a place where almost everything has yet to be built. “I don’t think South Sudan carried any greater risk than any other developing country in the world,” he said. “Things are just going to get easier and easier here.” The South Sudanese voted on secession from the alcohol-free Khartoum regime in the north in January 2011. Today South Africa is the biggest African investor in the rest of the continent but its South Sudan expansion marks a rare foray into unfamiliar territory. “There has been a steady trickle of outflows from South Africa over the last 10 years,” says Leon Myburgh, sub-Saharan Africa strategist at Citi. “But most of it has gone into the regional economy, SADC [the Southern African Development Community] plus Nigeria as the two focus areas ... I think they struggled with Kenya as it’s already quite a competitive economy.” Things may be changing. While South African money has long found its way into mining and natural resource projects, it is growing in other sectors, too, from banking to brewing. Standard Bank has set up shop in South Sudan and FirstRand Bank in Kenya of late; South Africa-listed Vodacom has interests in the Democratic Republic of Congo. Between 1990 and 2000, South Africa invested $12.5bn in the rest of the continent, according to the UN Conference on Trade and Development. By 2010, it had put in $14bn in a single year, representing about 21 per cent of its total foreign direct investment. Between 2003 and 2011, says Ernst & Young, the professional services firm, investment grew by 64.8 per cent. South African investment is more than double that of Kenya and Nigeria. It accounted for 4.1 per cent of all FDI Africa projects between 2003 and 2011, according to Ernst & Young. Like SABMiller, investors may yet push into newer markets. “In the end, our fear of competitors investing ahead of us was a strong factor,” says Mark Bowman, managing director for SABMiller Africa of an industry keen to pioneer new markets. “If you get in early, you are able to develop a strong position that is sustainable.” The decision to move into a region steeped in a history of violence during a five-year peace deal that promised the prospect of independence – which South Sudan achieved in July last year – was far from easy. The company must overcome everything from imports having to travel thousands of kilometres on bad roads, to distributing beer with all-terrain vehicles to the more remote reaches of the country. “I don’t see how a non-African company could have done this,” says Mr Bowman, underlining the “critical” need to understand the broad operating environment. “I don’t believe a company that has not operated here would have been able to get their minds around securing rights to the land by symbolically slaughtering a bull with the local community.” Today’s factory sits beside the Nile, ideal feedstock for its water-reliant plant on the edge of Juba, the dusty capital. To date, it has invested $71m, including $37m for the brewery at the outset, which made it – with the exception of oil companies – the biggest private sector investor in the fledgling country. “Of course we were nervous,” says Mr Bowman. “At the time there was no clarity on the future of South Sudan – and a brewery built in Wau before the civil war had been destroyed by the northern authorities before any beer had been sold.” But, like other companies used to working in tough spots, SABMiller felt it had the wherewithal to deal with everything from land rights and a population unused to daily work, to logistical headaches that include transporting goods 3,000km inland and company people living in tents. “I make no bones that I’m proud to be an African, that’s been useful. But the most helpful thing is that a lot of the people in the company have a can-do attitude that’s really helpful in South Sudan,” says Mr Alsworth-Elvey, whose wife joined him once he had moved out of the tent. It appears to be working. The company has since doubled production at the plant, which produces 150,000 bottles of soft drinks and drinking water a day as well as a daily 300,000 bottles of beer, including its local band, White Bull. The workforce has expanded to 427 South Sudanese along with a small team of 23 expatriates, among them four South Africans. “This is the sort of risk/return opportunity environment we thrive on,” Mr Bowman observes. “We back ourselves to deliver on our plan and we hope like hell the macro environment works in our favour.” www.ft.com/intl/cms/169a53ba-26e1-11e2-9295-00144feabdc0.pdf www.ft.com/intl/reports/south-africa-2012 END ______________________ John Ashworth Sudan, South Sudan Advisor [email protected] +254 725 926 297 (Kenya mobile) +211 919 695 362 (South Sudan mobile) +27 82 050 1235 (South Africa mobile) +44 750 304 1790 (UK/international) +88 216 4334 0735 (Thuraya satphone) PO Box 52002 - 00200, Nairobi, Kenya This is a personal e-mail address and the contents do not necessarily reflect the views of any organisation -- -- The content of this message does not necessarily reflect John Ashworth's views. 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