Nile Breweries

NILE BREWERIES

2 | Africa Outlook issue 91

FOOD & DRINK

BREWING FOR THE COMMUNITY “We remain market leaders with a clear focus on product quality and a mission to better the world.” David Valencia, Country Director at Nile Breweries Limited, discusses the company’s efforts to provide opportunity and community benefit throughout Uganda and the continent Writer: Marcus Kääpä | Project Manager: Kyle Livingstone

T

he last 18 months have been challenging for the food and beverage industry across the globe.

It is safe to say that COVID-19 has had a dramatic effect on the sector as it has been forced to adapt to the pandemic, with almost all companies and employees within the industry altering the way they work and function to weather this unique and challenging period.

For Nile Breweries, the pandemic has revealed the enduring spirit of the company despite the challenges posed.

“In Uganda, we have focused on playing to our strengths to build a stronger and more sustainable business in a post pandemic reality,” begins David Valencia, Country Director at Nile Breweries.

“We remain market leaders with a

clear focus on product quality and a mission to better the world. The Ugandan beer industry has been resilient despite continued COVID-19 trade and mobility restrictions.”

“The level of informality in the alcoholic beverages sector however remains a large concern. Last year, electronic tax stamps were implemented in the country, and we applaud the government’s decision to increase efforts towards formalising the industry. However, we must continue to work towards effective methods which do not increase the cost burden to the formal sector whilst achieving this objective.”

mEeTING THE DEmAND FoR QUAlITY GRAIN & CEREAlS AgroWays (U) Ltd is a well-known grain and cereal handling enterprise with two bulking centres in Jinja City, eastern Uganda and the other bulking centre in Mbarara City, western Uganda. The company buys, processes, stores and sells a range of grains and cereals including maize, sorghum, barley, soy bean and beans. It also manufacturers maize grit for use as a brewing adjunct. The company has also expanded its portfolio to include cassava starch.

The company traces its history from a humble beginning 25 years ago in a rented store downtown behind a motor garage where it handled only maize and had a capacity to aggregate 20 mt per harvest season. To-date it has a capacity to process and aggregate 60,000 mt annually of grain and cereals and is currently upgrading its facilities to hundle 80,000 mt annually in a country with two harvest seasons per year.

AgroWays was the first to be licensed as a public grain warehouse in Uganda under Warehouse Receipt System Act (2006) and is still leading in offering this service. But, according to Herbert Kyeyamwa, the Managing Director, AgroWays is known more for its unique role of connecting two worlds: One, of modern food and beverage companies with extremely high standards for quality and food safety and with urban customers demanding the lowest possible prices; the other, of extremely fragmented and poor farmers cut off from these markets by poor infrastructure, inefficiency and bad quality. For the modern food and beverage companies, the challenge of organising and upgrading the supply chain at a cost that makes business sense seems formidable. On the other hand, poor farm households, trapped in poverty and daily survival, cannot even begin to think about how to meet demanding market requirements for such customers. He acknowledges that it is an enormous task bridging the gap between these two worlds in a way that is commercially viable for modern food and beverage companies while also providing these small-scale food suppliers with a rewarding pathway out of poverty and hunger.

Nile Breweries is AgroWays leading customer. Other customers include Brarudi of Burundi and WFP. In 2008, AgroWays partnered with Nile Breweries a leading beverage (beer) company owned by the world’s largest brewer, ab-InBev, to organize the value chain for maize growers.

Maize grit from locally produced maize became an important import substitute for imported corn starch saving the brewery 30 percent in exercise duty and contributing to its pretax margins. AgroWays has invested in state-of-the-art technology and is providing maize grit with consistent quality and at affordable prices. Based on the long-term relationship, reputation and track record accumulated since 2008 and a shared vision to build efficient value chains, Nile Breweries has also entrusted AgroWays to handle sorghum, barley as well as cassava adjuncts.

So, what has enabled AgroWays to be a reliable partner to NBL for over a decade in a game and market that others have tried and fallen by the way side?

SucCesS on the back of hard work Herbert alludes the company’s success to the culture of excellence and the strive to always exceed customer expectations in terms of quality, price and on-time delivery which factors he is particularly passionate about. Herbert stresses that “as a manager you don’t have all answers and you can’t solve all problems. Therefore, you need a strong team that you believe in and show them that you believe in them.” The company has a very able and empowered team, well qualified and motivated to drive the processes all the way from field agronomists, a fully-fledged quality department, a production segment headed by a seasoned production manager and an efficient finance department to facilitate the operations. The company underpins the culture of excellence in people throughout the organisation. This has enabled us meet the demand by our customers for quality grains and cereals all year round without interruption.

Food safety and operational excellence The other score is on food safety and operational excellence. The company’s Quality Assurance Supervisor and Food Safety Team Leader Bridget Asumpta Nabwire says the company’s food safety excellence journey started even before the company received the ISO 9001:2015.

The ISO certification added confidence to our customers that Good Manufacturing Practices (GMP) are followed in all our processes.

Bridget declares that the company has achieved great progress in terms of plant hygiene, personnel safety, and operational excellence and that the company is on the way to updating to FSSC 22000 since all requisite documentation and procedures are in place. Bridget is full of praise for the top management for setting the pace and tone of excellence in the company. “The management has placed the right priority on food safety and quality excellence by providing the requisite resources, time and training which has enabled everyone in the company to place food safety and quality on top of their agenda.” “Our food quality lab is top of the range and able to guide our operations” she adds.

Broad farmer network AgroWays ability to please and retain customers is grounded on a supply-chain advantage provided by a robust network of committed loyal farmers. Richard Ibengo the Business Development Manager explains that “the company prefers to work with

AgroWays Uganda Ltd Plot 34-60, Kyabazinga Way, Jinja City, Uganda Phone: +256 434 660419 | +256 772 404245 | Email: info@agroways.ug www.agroways.ug

farmer groups because it makes it easy to impart a culture of quality.”

Currently, 142 farmer groups each with an average membership of 74 smallholder farmers market their maize through AgroWays, and 7354 farmers sell their sorghum through AgroWays while 7,646 barley producers sell their crop through AgroWays” He proudly informs our team that “many of the farmer groups have been with the company for a long time supplying largely organically grown and purely non-GMO crop to the delight of our customers.” The long-term farmer relationships, transparency and mutual trust positions AgroWays as the preferred choice by farmers in marketing their crop in the Eastern region of the country. Richard however, adds that “inculcating a quality culture throughout the supply chain especially at farm level is still a challenge and that is why AgroWays relevancy in bridging the gap of a “missing middle” is still relevant today as it was when the company first partnered with NBL in 2008.”

Farmer/Community involvement The company is very proud of its attachment to farming communities where it has constructed Village Aggregation Centres (VACs) – run and managed by the communities in the respective districts. Grain is aggregated at these centres and transported to the main Bulking Centre. So far 5 VACs are operational deep in rural areas of the districts of Mayuge, Kaliro, Namutumba, Buyende and Kamuli. The farmers in these areas are trained, and also supported with inputs and maize shellers to minimize post-harvest handling, improve the quality of maize and be able to participate in the value chain. Similar arrangement is working well for barley but the buying centres are managed by AgroWays’ staff. This sourcing model permits a reasonable degree of traceability for grains and cereals from rural, low infrastructure environments all the way to our customers.

The company, relying on long-term offtake Agreement with NBL established and operates an innovative value chain financing model which since its launch eight years ago has scored success beyond expectation. Joseph Watambula a barley and sorghum aggregator in northern Uganda testified “I find AgroWays most helpful in solving problems related to financing our grain purchases. The revolving fund operated by AgroWays ensures we have sufficient liquidity to compete in the field and secure enough volumes of quality sorghum and barley.

This has not only stabilized our businesses but we are also in a position to upgrade our own grain handling facilities. AgroWays remains our preferred partner”.

The beaming face of Afuwa Mutyaba a mother of six and a small holder maize farmer in Namutumba district Eastern Uganda also has a success story to tell. “From the bottom of my heart I am grateful to AgroWays for the market outlet for my maize over the last ten years and support in form of a maize sheller.

I have managed to build a modest house for my family and I can afford school fees and all the scholastic materials for my children.

I no longer feel that pain of seeing my school-going children

sent away from school because of unpaid school fees. This has also increased the interest of my children in school because they no longer feel left out”.

Continuous Improvement Abbot Ogwang the company’s Accounting Manager, says “it is important to predict and quickly adopt to customer demands and consumer trends. Our customers are continuously seeking high quality and lowcost raw material from us to enable their products compete favourably”.

He adds that AgroWays’ philosophy is not to “kill” the farmer in order to please the Customer but that it is possible to remove inefficiencies in the value-chain and score a win-win to all parties. AgroWays works closely with its customers to continuously improve the efficiency of the value chain.

Abbot revealed that to further remove inefficiencies in the value chain, AgroWays is investing about US $8 million this year in expansion plans.

“We have an ambitious growth trajectory to unlock the full potential throughout the value chain. Uganda Development Bank (UDB) as a financing partner has come in handy. The investment will allow the company to expand its processing and storage facilities, launch new products and further develop its sales across the wider East African Region”. He added “our market is concentrated in Uganda but we have plans to go wider and further. Continuous upgrade and improvement of our processes is needed to position ourselves within this dynamic of the industry.”

Herbert applauds NBL and our other steady customers. He points out that over 90 percent of grain trade in Uganda is informal and besieged with quality issues, unpredictable supply and price volatility. Policy options to deal with these uncertainties as is the case for coffee are a long way for grains and cereals. However, they are brought under control through long-term business relationships. AgroWays has a proven record as a reliable partner. “We say to our partners that we are prepared to walk and grow long-term relationships for a number of years. We want to continue crafting cost efficient strategies together to achieve a win-win situation for all actors in the value chain.”

NILE BREWERIES Nile Breweries has been operational in the food and beverage industry for almost 70 years. The company works every day to offer great quality products to its customers and has two production facilities employing a total of 650 members of staff. The Mbarara brewery is consistently recognised as among the best in Africa and is highly regarded internationally. From facilities such as these, Nile Breweries products are also exported into the Democratic Republic of Congo and South Sudan, adding to the overall Ugandan economy.

Through the decades, the company has also played an important role in contributing to the livelihoods and progress of Uganda and its people, as Valencia explains.

“Our contribution to our ABInBev business in Africa is considerable and we are very proud of this,” he elaborates. “As part of ABInBev we work on several initiatives to positively impact communities where we operate. Examples of these include the deployment of the ‘No Excuse Campaign’ which sought to create awareness and mobilise against gender-based violence.

The company has worked hard to advocate responsible drinking because we believe that beer is a social catalyst and every experience with beer should be a positive one.

These initiatives have led Ugandans to recognise Nile Special as the most admired brand in the country.

“We have moved forward in our Global Smart Drinking Goals which contributes to the WHO target of reducing the harmful use of alcohol.

We have supported the government efforts of revenue collection and reducing illicit alcohol yet lots of work still needs to be done on this front. We have continued to develop our value chain to support Ugandan farmers and we continue to evolve our programmes. For example, we have recently deployed a crop insurance pilot.”

6 | Africa Outlook issue 91

Africa Outlook: How did you come to work for Nile Breweries?

David Valencia, Country Director: “My interest for the brewing industry begun at a very early age.

I am a second-generation beer brewer and you could say that the industry is family.

“I began my career in beer in 2009 in Guayaquil, Ecuador with SABMiller in Route to market.

Straight away I was thrilled to be part of a business which brings people together. The route to market scope was pivotal in accelerating my learning curve in the industry as we executed projects which incorporated an end-to-end understanding of the business.

“The most exciting part of my career has been on the amazing continent of Africa. During the following seven years the scope of work increased in complexity as I moved from roles ranging from

commercial services and business intelligence to key accounts management.

“In 2017, SABMiller became part of ABInbev and it was at this time that I took up a Southern Africa role to design route to market improvements across Mozambique, Zambia, Botswana and Namibia.

Towards the end of 2017 I took on the commercial leadership in Mozambique as Sales Director. I am very proud of the work done in Mozambique and thankful to the amazing people that supported the legacy left.

“Since January 2021, I have been leading an amazing team and business as Managing Director of Nile Breweries, ABInbev’s subsidiary in Uganda. My career so far is testimony of our business principles at work: “Our greatest strength is our people. Great people grow at the pace of their talents and are rewarded accordingly. Great people deliver and transform.”

Members of the AgroWays’ production Team, AgroWays’ production team is focused on continuous improvement of quality and food safety.

Small holder farmers happy at the quality of their harvest after applying proper agronomy practices, these were also supported by aBi Trust Ltd.

Small holder farmers pose on their maize grain field, AgroWays in collaboration with other partners support the small holder farmers to improve their yields and produce high quality grains.

AgroWays Uganda Ltd Plot 34-60, Kyabazinga Way, Jinja City, Uganda Phone: +256 434 660419 Phone: +256 772 404245 Email: info@agroways.ug www.agroways.ug

NILE BREWERIES PEOPLE-CENTRIC FOCUS Nile Breweries consistently operates with people, both its customers and the surrounding society, in mind.

This is exemplified by the company’s efforts to alleviate Uganda’s level of unemployment. Recent data reveals that the nation’s unemployment rate is hovering at around 9.2 percent, with the younger population between 18 and 30 years old at 13.3 percent; an age group that makes up 78 percent of the national population.

According to a governmental revelation in April, this rate is likely to have risen with the closure of over 4,000

Africa Outlook: What part do company suppliers play in the success of Nile Breweries?

David Valencia, Country Director: “Our beers are manufactured with local malted barley and sorghum; we invest and generate value for over 20,000 farmers in Uganda.

“We focus on support initiatives to strengthen and develop local suppliers. For example, recently we have closed purchase agreements for locally manufactured crowns. Our Agri programme generates close to $30 million annually in farmer revenue, value chain and upskilling benefits. On top of this, we contribute close to $15 million towards local businesses.

“Our suppliers and partners are extremely important towards the success of our business. I would like for Nile Breweries to be without question the best business partner for all our stakeholders.”

8 | Africa Outlook issue 91

companies during the first month of the COVID-19 pandemic. To contribute towards tackling unemployment, Nile Breweries has undertaken multiple initiatives over the years.

“In 2014, Nile Breweries launched a youth entrepreneurship programme called Kickstart, to provide intensive business skills for start-ups,” Valencia says. “The programme targeted young entrepreneurs between the ages of 18 and 35, with a focus on bringing good ideas to life, through provision of training, mentorship and grants of up to $20,000 to grow them.”

“The most critical aspect of the Kickstart programme was that winners were challenged to formulate innovative ideas that solved problems in the communities and created jobs.

Kickstart has attracted over 5,000 people since it started. Initial competitions narrow down participants to 50 during each season, and eventually the top three winners are picked. The winners have gone on to become

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NILE BREWERIES successful in their businesses. Experts in the field put the job creation ratio at a successful two to one.”

Last year, in light of the economic devastation suffered by most in this age bracket in the wake of the COVID-19 pandemic, Nile Breweries repackaged Kickstart as ‘Be A Millionaire’ (BAM); a competition in which 100 finalists whose ideas met the criteria set by the brewery’s partners, Enterprise Uganda, were

Africa Outlook: What do you expect from your tenure in Uganda?

David Valencia, Country Director: “I like to dream big and as such I would like to contribute towards positive change and a business transformation which enables us to innovate faster and deliver inclusive growth.

“This is very important, as a leading FMCG we are part of the fabric of society and generate value to thousands of Ugandans from the field to the retailers, our best comes when we grow. When our volumes grow our products enable economic development and empowerment.

10 | Africa Outlook issue 91

to be chosen from different parts of Uganda to win one million Ugandanshillings each.

To participate in the campaign, aspiring entrepreneurs within the bracket across the country were required to draft a brief plan on how they would use one million Ugandanshillings to start their businesses. Over 500 individuals shared their ideas with hopes of being selected among the 100 winners. The winners were

“I’d like for Nile Breweries to attract talent and become the preferred employer in the country. There is amazing talent in this country, and we need the best talent if we want to drive growth. We will continue to develop our Corporate Social Responsibility programmes, advocating responsible consumption and we will support initiatives to formalise illicit alcohol in order to contribute to the reduction of harmful use of alcohol.

“We are building a business for the next 100 years and beyond! We will do so through the amazing talent of our people and our great products.”

mentored by Enterprise Uganda.

“This was a gesture that we believe will go a long way in reviving and keeping afloat ‘Small Business’ (SMEs) which employ the majority of the youth in the country,” Valencia says. “We launched the new season of BAM in July this year.”

COMMUNITY AND CULTURE Farmers are a critical part of the Nile Breweries value chain and are key for the sustainability of the business. The company has been uplifting the livelihoods of farmers through different programmes over the years, encompassing training, mechanisation and information.

With the current local sourcing at 98 percent, on average, Nile Breweries spends 52 billion Ugandanshillings on Ugandan farmers (NKC African Economics report 2020).

According to the report, 89 percent of Nile Breweries supplying farmers reported that their quality of life had improved and indeed Sorghum farming households supplying the company reported to have doubled their income.

“Nile Breweries’ agriculture sustainability goal is to have 100 percent of its direct farmers skilled, connected and financially empowered by 2025, and all engagements with farmers are geared towards those three aspects,” Valencia informs us.

“In 2018, ABInBev, Nile Breweries’ parent company, set aspiring 2025 Sustainability Goals to drive progress across our fully integrated supply chain – from the farms that supply our ingredients to the packaging that delivers our beer. We believe that companies have an important role to play in achieving the United Nations’ Sustainable Development Goals, which is why we have aligned our own goals with them, so we make a valuable contribution.”

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company has a clear focus to build profitable growth and bring people together for a better world, and this vision remains stronger than ever, despite COVID-19.

“Fundamentally, our business can cope with volatility,” Valencia says.

“This is possible because we manage our costs tightly in order to free up resources to drive top line growth. This also is extremely useful in tough times.

We have a strong business which is being built for the next 100 years.”

“Locally we have the most powerful brands in the country, and this is truly what makes our portfolio special. Our Nile Special beer is unmatched in gold awards, receiving a total of 22 Mondes Gold Awards. Our Club Pilsner brand represents the future of Uganda while our Eagle Portfolio speaks to the pride in origin from seed to sip. In the future our portfolio will be complemented with our global brands reinforcing our market leadership as we bring in the true premium to Uganda.”

MOVING FORWARD Despite the challenges posed by COVID-19 in these past 18 months, Valencia is optimistic about the years ahead.

“The future of Uganda is mighty - mighty like the Nile!” he tells us proudly. “It is very exciting to be in this industry and the moment. Beer per capita in Uganda is low and there is massive opportunity in accelerating consumer entry into clear beer from one of the largest informal alcohol pools in Africa.”

According to Valencia, at the same time Uganda’s middle class is rising fast, coinciding with the country’s workforce which is set to double by 2030. The well-known core brands that Nile Breweries owns, in line with the rising investment, will help the company capture critical trading opportunities and open its doors to an increasing consumer base. On top of this, with around half of the Ugandan population approaching drinking

age, Nile Breweries is presented with unparalleled opportunities and consumer connection in the years ahead.

“I’m very excited in connecting our consumer centric mentality and the evolution of our portfolio to cater for the growing market,” Valencia says.

“Our expectation in the upcoming year is for double-digit growth as we continue to be part of the solution in post pandemic recovery. Our aim will be to become more consumer centric as we accelerate our innovation agenda with people at the heart of Nile Breweries.”

Tel: +256 (0) 31 2 210008 corporateaffairs@ug.sabmiller.com www.nilebreweries.com

Africa Outlook issue 91 | 11

NILE BREWERIES Plot 6-10 Portbell Road P. O. Box 1345 Kampala, Uganda Tel +256 (0) 31 2 210008 Fax +256 (0) 31 2 240141 Tel: +256 (0) 31 2 210008 corporateaffairs@ug.sabmiller.com www.nilebreweries.com

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