Brewer fails to make profit in South Sudan

SABMILLER has cut production and fired more than half the workforce at its South Sudan unit as a lack of foreign currency and the soaring cost of beer holds back investment and stifles demand.

The world’s second-biggest beer maker has failed to make a profit in South Sudan since opening the east African country’s first brewery in 2009, according to Carlos Gomes, the managing director of the unit, South Sudan Beverages Limited.

The beer company had cut 250 jobs in the past two months and reduced output of local beers such as White Bull to 15 percent of June volumes, he said.

SABMiller had “invested $94 million (R1.2 billion) in various packages and is not willing to put in money when there are no dividends”, Gomes said.

The brewer had not “got a single cent in return since we started operations”, he added.

South Sudan’s economy, which relies on oil for almost all exports, will probably contract by 7.5 percent this year as crude production falls after almost two years of civil war that has killed tens of thousands of people and displaced 2 million, according to the African Development Bank.

Inflation was 59 percent in August, more than doubling the cost of beer, while a shortage of foreign exchange in banks has meant businesses have sought funds on the black market.

SABMiller generates almost a third of its revenue and profit from Africa, the world’s fastest-growing beer market. SABMiller, which can trace its roots back to 19th century Johannesburg, has operations in 17 African countries, according to its website.

SABMiller is “committed” to maintaining operations in the country, which gained independence from Sudan in 2011 after more than two decades of civil war.

That allowed the population to drink alcohol after the end of Shariah law imposed by northern governments.

“We would like to continue to be here; our long-term stay is based on getting forex,” Gomes said. – Bloomberg