Saving water for beer, and Africa
THE biggest risk to societies and economies across the globe is not terrorism or cyber crime, says the WEF Global Risks Report, but water scarcity. That’s why SABMiller, the world’s second-largest beer company, is determined to use a lot less of the stuff.
Since 2008 SABMiller has reduced its water use per litre of beer by 28%. It now uses 3.3 litres of water to make one litre of beer. In the past year alone the global beer and soft-drink giant reduced its water consumption by 29 million hectolitres, which is equivalent to the water used by 116 000 Africans in one year.
The good news for shareholders is that facing up to the world’s biggest risk helped reduce costs by $117-million in the past financial year as management implemented water and energy initiatives across the group.
“The business case for conserving water both within our own operations and in the communities where we work is clear and compelling,” group CEO Alan Clark told delegates at the World Economic Forum meeting in Cape Town this week.
“There’s been progress on water in Africa but it is neither universal nor consistent. Hundreds of millions of people in Africa lack access to safe drinking water,” said Clark. He urged businesses to work with local partners and communities to bring about real change.
As the head of a company that sells a lifestyle product rather than a basic necessity, Clark said he understood the importance of staying on side with the communities and governments where it operates. “It’s very easy for governments to slap us into line if they feel the need to,” Clark said at the forum.
It is one of the reasons SABMiller cannot act like just another company trying to extract profits from Africa. And it is why 65% of the raw materials used in its operations across Africa, including packaging, are sourced locally. SABMiller’s supply chains are embedded in the local communities and includes developing new products suitable to the environment.
“In Uganda, we have 20 000 farmers supplying us with sorghum. We are tied to this source of supply. We can’t walk away from them.”
Clark is no Afro-pessimist; when pushed to identify areas of concern on the continent, he concedes that there are “interruptions” at individual country level — but “overall, Africa remains on a strong, upward trajectory”. And it is on track to provide an increasing proportion of SABMiller’s income.
Low per capita consumption, a young population and high rates of urbanisation provide the ideal environment for the strong growth of this lifestyle product. Beer consumption in Africa is — on average — about nine litres per capita per year. This compares with the global average of about 70 to 100 litres a year.
SABMiller and its partner in Africa, French-owned Castel, have managed better than any of the other beer groups to tap into this market potential. Clark said it was because SABMiller had a 120-year history in Africa.
This familiarity may also be why Clark is not stumped by the more common complaints about operating in Africa.
“There aren’t really any insurmountable problems. There are sometimes difficulties like getting access to power and water, but you make plans.”
The need to distribute beer in regions with poor roads means having lots of smaller breweries closer to market. “It’s a similar situation in parts of South America,” said Clark.
He would not be drawn on the possible acquisition of Castel by SABMiller. For years analysts have been speculating about such a deal, which many feel is inevitable given Castel’s family ownership and the consolidation in the industry.