Heineken Sierra Leone

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  • Topic: Sierra Leone, Sierra Leonean leone, Sorghum
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  • Published : December 24, 2012
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Heineken in Sierra Leone
The local sourcing of Sorghum by the Sierra Leone Brewery Limited (SLBL)

Roos Apotheker

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Content
1. 2. 3. 4. 5. 6. 7. Introduction to the business .......................................................................................... 3 Supplier profile ............................................................................................................ 4 Business drivers for starting up Local Sourcing ................................................................ 6 What are the required ingredients for doing local sourcing: conditions and steps? ................ 6 What are the costs and the returns for businesses .......................................................... 10 Incentives for small scale farmers ................................................................................ 11 Conclusions and challenges ahead ................................................................................ 13

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1. Introduction to the business
The Sierra Leone Brewery Limited (SLBL) was established in Freetown in 1962. During the civil war (1991 -2002) the brewery was destroyed and used as quarters by the rebels from the Revolutionary United Front (RUF). After the war investments and rebuilding took place to get the brewery up and running again. Since then production is increasing, the share of SLBL drinks in the market is growing, and the brewery started with the project of local sourcing of sorghum. Box 1: Current Shareholders Major Shareholders of SLBL 2012: Heineken International (85%) Diageo (Guinness International) (10%) Minority shares (5%): Paterson Zochonis (PZ) Local Sierra Leonean Public

The vision of the brewery is “To be an exemplary company contributing to the sustainable development of Sierra Leone by creating more value to all stakeholders.” Beer & malts SLBL sells around 110.000 Hectolitres of drinks annually. Three types of drinks are produced: Star (lager), Guinness (stout) and Maltina (a malt drink). The Heineken brand is also sold through the brewery, but is imported. All drinks are brewed for the local market. Through marketing and branding, the Sierra Leonean market still has growth potential. The introduction of a new bottle, label and recipe increased sales of the STAR brand strongly in 2011. SLBL‟s overall market share has increased over the years from 65% in 2008 towards 85% in 2011. Clients are 90% catering facilities and around 10% home consumption. Table 1: Revenues SLBL 2007-2011 SLBL - Revenue development Year Revenue - Leones Revenue - Euro 2007 31.491.862.000 8.571.573 2008 35.167.309.000 9.313.576 2009 36.485.869.000 7.857.976 2010 2011

44.743.500.000 57.116.600.000 9.139.250 9.383.441

SLBL has 116 direct employees and uses casual and seasonal labour. Management exists of a team of 5 heading the following departments: Commerce, Supply Chain (incl. procurement), Finance and Human Resources. Since March 1 2012 SLBL is managing local sourcing as part of their business. The years before, management of local sourcing was partly outsourced to an NGO (EUCORD) and local consultancy (Vancil). Local sourcing of Sorghum Beer consists of several ingredients: water, malted barley and hops. Malted barley is a raw material that has to be imported, since it does not grow in Sierra Leone. However, sorghum has potential to partly substitute malted barley and can be grown locally. In other African countries sorghum is already used as a substitute for malted barley in the production of beer.

Picture 1: Sorghum

About six years ago, Mr Tom de Man (then the Regional President for Africa and the Middle East at Heineken International) was asked by the former President (President Kabbah) whether Heineken could involve more local farmers and local people in the brewing business. His driver was to help poor farmers and labourers acquire an income (especially in the post-war context). Before the war, SLBL used to import most of the ingredients for...
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