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Ostacles for SABMiller to entering the Mozambique beer market

by Fabio Botta (Author) Damián Loustau (Author) Shumei Zhong (Author) Zhijia Zhao (Author) Erno Ahola-Olli (Author) Donovan Kong (Author)

Seminar Paper 2017 9 Pages

Business economics - Operations Research

Excerpt

Beer for All: SABMiller in Mozambique report

From their birth in South Africa, to become a major competitor in beer market, SABMiller has shown the world that their business model in sustainability gave them the competitive advantage to not only be sustainable in the beer market, but more importantly develop a corporate social responsibility. Another reason how SABMiller seeped into different nations was their reliance on global leaders in supply chain management. However, in their recent dealings to try and enter the Mozambique beer market in 2011, there were a few obstacles that they had to overcome with help from third party members. In this paper, we will discuss about the social and economic aspect of Mozambique, the shift they made to penetrate the Mozambican market, explaining who the third-party members are and finally explore whether SABMiller’s entrance in Mozambique contributed to the people or if it didn’t help them at all.

Mozambique

Mozambique, situated in the south east of Africa at the Indian Ocean coastline, has developed significantly in the last decades. With a gross domestic product (GDP) of $13.1312 Billion, a GDP per capita of $605,99 and GDP growth rate of 7,7%, Mozambique was in 2011 the 4th fastest growing country in the world and one of the one of the highest nonpetroleum growth performers in sub-Saharan Africa.[1],[2],[3] The country had an average GDP growth rate from 1992-2011 of 7,6%.[4] In 2011, Mozambique had 24,939 Million inhabitants with a median population age of 17,26 in 2012 and an adult literacy rate of 50,6% in 2008-2012.[5],[6],[7] The country’s official language is Portuguese.

Exhibit 1 Abbildung in dieser Leseprobe nicht enthalten

Almost five decades of colonization, Independence from Portugal in 1975 and a following civil war from 1977 to 1992, left the country in “ruins”[8]. The following economic growth was mainly driven by foreign aid and investment and the extraction of natural resources by foreign organizations, the regaining of political stability and political reforms were other important factors.[9] In 2011 still more than half of the country’s annual budget came from foreign assistance, which was one of the highest rates in the world.[10] And most of the extracted resources were exported and were turned into manufactured products abroad. The economy growth has not been inclusive: in 2008 half of the country’s population lived below the poverty line, the minimum wage was 87$ per month and 81% of the population worked in agriculture. However, 90% of arable land was still unexploited, due to inadequate commercial networks, financing and infrastructure.[11]

Inflation problems, government deficit, fluctuating prices of key exports, natural phenomena and renewed violence between government forces and the Mozambican National Resistance rebel group, the conflicting parties of the previous civil war, weighed on the economy in recent years.[12] According to SABMiller, the new increase of political tension influenced consumer demand and resulted in declining lager volumes by 2% in 2014.[13] With a GDP growth rate of 3,6% in 2016, Mozambique recorded the lowest rate in 15 years. In November 2016 inflation in Mozambique reached an all-time high with 26,35%.[14] The inflation problems had direct implications for Mozambican households and although they led to a tight monetary policy, Mozambique’s reference lending rate was at 22,75% amongst the highest sub-Saharan Africa.[15] The “Corruption Perception Index 2016” ranked the country 142th out of 176 countries.[16] However, World Bank estimates high growth rates for the country’s future, as its gas reserves are estimated to be some of the largest in the world, and as the coming online of gas projects is expected to start 2023.[17],[18] In November 2017 the Mozambican government introduced a bill, that includes a new tax rate of 10% for beers using at least 50% local raw materials, which could lead to a strengthening of the Impala beer, which is main component of the following report.[19] If the used raw material is at least 50% local maize, the tax rate comes down to 7.5%. Latter was announced just four months after SABMiller announced a possible launch of a locally-grown-maize beer.[20]

[...]


[1] World Bank. GDP in current US$, not adjusted for inflation & GDP per capita in current US$

[2] Deloitte. “Mozambique’s Economic Outlook, Governance challenges holding back economic potential” December 2016, p.4. https://www2.deloitte.com/content/dam/Deloitte/za/Documents/africa/ZA_Mozambique%20country_report_25012017.pdf

[3] SABMiller plc. Annual Report 2011, p.11. http://www.ab-inbev.com/content/dam/universaltemplate/ab-inbev/investors/sabmiller/reports/annual-reports/annual-report-2011.pdf

[4] World Bank. GDP percentage change of real GDP compared to previous year. Real GDP is adjusted for inflation.

[5] World Bank. Population: midyear estimates of the resident population.

[6] World Health Organization. Population median age 2012. http://data.un.org/Data.aspx?q=united+states+of+america&d=WHO&f=MEASURE_CODE%3AWHS9_88%3BCOUNTRY_ISO_CODE%3AUSA#WHO

[7] UNICEF. Total adult literacy rate (%) 2008-2012. https://www.unicef.org/infobycountry/mozambique_statistics.html

[8] World Bank. The World Bank In Mozambique. http://www.worldbank.org/en/country/mozambique/overview#1

[9] Deloitte. “Mozambique’s Economic Outlook, Governance challenges holding back economic potential”, p.4

[10] Global Financial Integrity. “Hiding in Plain Sight Trade Misinvoicing and the Impact of Revenue Loss in Ghana, Kenya, Mozambique, Tanzania, and Uganda: 2002-2011” May 2014, p.25. http://www.gfintegrity.org/wp-content/uploads/2014/05/Hiding_In_Plain_Sight_Report-Final.pdf

[11] Organisation for Economic Co-operation and Development. “OECD Investment Policy Reviews: Mozambique Executive Summary and Recommendations” October 2013, p.4. https://www.oecd.org/daf/inv/investment-policy/IPR-Mozambique-Oct2013-Summary.pdf

[12] Bowker Tom, Kamm Simon, Sambo Aurelio. “Mozambique’s Invisible Civil War”. Foreign Policy. 06.05.2016 http://foreignpolicy.com/2016/05/06/mozambiques-invisible-civil-war-renamo-frelimo-dhlakama-nyusi/

[13] SABMiller plc. Annual Report 2014, p.26. http://www.ab-inbev.com/content/dam/universaltemplate/ab-inbev/investors/sabmiller/reports/annual-reports/annual-report-2014.pdf

[14] Trading Economics. Mozambique Inflation Rate. https://tradingeconomics.com/mozambique/inflation-cpi

[15] World Bank. “Mozambique Economic Update, A Two Speed Economy” July 2017, p.10. http://documents.worldbank.org/curated/en/790351501245021584/pdf/117784-REVISED-MEU-2017-English-Digital-Version.pdf

[16] Transparency International. Mozambique. https://www.transparency.org/country/MOZ

[17] Global Financial Integrity. “Hiding in Plain Sight Trade Misinvoicing and the Impact of Revenue Loss in Ghana, Kenya, Mozambique, Tanzania, and Uganda: 2002-2011”, p.25

[18] Deloitte. “Mozambique’s Economic Outlook, Governance challenges holding back economic potential”, p.4

[19] AllAfrica. “Mozambique: Assembly Passes Bill On Taxes On Luxury Goods”, 22.11.2017. http://allafrica.com/stories/201711230167.html

[20] Club Of Mozambique. “Cervejas de Moçambique to launch new beer” 18.07.2017. http://clubofmozambique.com/news/cervejas-de-mocambique-to-launch-new-beer/

Details

Pages
9
Year
2017
ISBN (eBook)
9783668718067
ISBN (Book)
9783668718074
File size
967 KB
Language
English
Catalog Number
v427505
Grade
1,3
Tags
beer sabmiller mozambique

Authors

  • Fabio Botta (Author)

    7 titles published

  • Damián Loustau (Author)

  • Shumei Zhong (Author)

  • Zhijia Zhao (Author)

  • Erno Ahola-Olli (Author)

  • Donovan Kong (Author)

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Title: Ostacles for SABMiller to entering the Mozambique beer market