Beer Brewing Is Big Business In Ethiopia

Report by US Embassy in Ethiopia - Commercial Section
October 21, 1998

1. The Ethiopian government plans to turn all four of its state-owned breweries over to the private sector. The only one in the pipeline, however, is the venerable Brewery in the capital -- "Saint George" -- which was sold to the French company BGI. "Meta," a 14-year old Brewery close to Addis, and "Harar," which makes Pilsner, Stout, and a non-alcoholic beverage, are expected to be tendered soon. Built in 1993, "Bedele" may be the last to go on sale. Competition is becoming stiff in the beer business, however, with four new breweries currently under construction. Several new owners intend to produce for the export market.
End Summary

Bedele Beer - Building A Reputation:
2. Commercial officers visited the Bedele Brewery, located in Bedele town 500 kilometers west of Addis Ababa, in late September. The brewery was constructed with the assistance of Czechoslovakia and inaugurated in October 1993. Bedele production manager Sirata Guluma said many beer ingredients are found locally. Barley is grown outside of Addis Ababa. Malt is processed in Asela, though some malt is imported from Germany during local shortfalls. Hops, both liquid and pellet, comes entirely from Germany. Yeast, added to the beer with air to induce fermentation, is imported from Europe but can be reused 3-4 times, according to Sirata. Sugar, and occasional additive, is produced locally.

3. The machinery used in the plant is predominantly Czech. The brewing process, including the mixing, sieving, and crushing of ingredients, the boiling, and the extraction of bitter residues takes 9-10 hours. The plant consistently turns out 75 million bottles annually. Many of the 420 employees live in town. Brewmasters and Engineers that Bedele lured away from the other breweries live in the 45 houses on the brewery compound.

4. One modern feature of the brewery are the 32 inverted conical fermentation vats (23 of which hold 1,000 hectoliters; 9 hold 500 hectoliters). These modern vats perform the two-step process of beer fermentation in one stage. Other breweries let the fresh batch ferment 5-7 days before moving it into another tank to separate the yeast. At Bedele, the yeast is discharged directly from the fermentation vats. This prevents any contamination or unwanted oxygenation, saves manpower, time and money, and improves the taste and hygienic quality of the beer.

5. The beer matures after 30 days, is filtered, and bottled on the compound before shipment to all regions of Ethiopia. Although a local water source may account for placement of the brewery in Bedele, the plant is far from the primary beer consumption areas around the capital. Trucks must transport the beer 10-12 hours on poor roads. Besides the additional transportation costs, the factory's distance from the market means Bedele cannot offer its beer in kegs or barrels; unrefrigerated draft beer has an extremely short shelf life.

Rumor mill - for better or worse:
6. Bedele exports a small amount of beer to Canada (some of which ends up in the United States). The company will introduce half-liter bottles once a sufficient quantity of bottles arrives. The half-liter is much anticipated, especially because of a rumor that the alcoholic content would exceed 12%. (the laboratory technicians dispelled this rumor. The beer will be 4.2% alcohol just like the regular size bottle.) Bedele has no plans to introduce a "light" beer or a dark beer, though the company is importing gold caps to improve the design of its exports. Although Bedele has benefited from the hype generated by these recent rumors, it still suffers from spurious gossip three years ago that the plant was repackaging the Eritrean beer "Mellotti."

The Selling of Saint George:
7. Ethiopia's oldest brewery -- Saint George, founded in 1922 -- is located in central Addis Ababa. General Manager Tadele Abebe confided to commercial officers during an October 8 visit that the French BGI group (Societe des Brassieres et Glaciers Internationale) controlled by Pierre Castel just formalized an agreement to take over Saint George. Ownership will change hands in November. Tadele expected only a minor interruption of production to allow an inventory of bottles, vehicles, crates, kegs, equipment, and spare parts.

8. The new owners are likely to continue using the Saint George name, Tadele said. The company may add one or two of the beer labels it is introducing from a new brewery under construction in Kombolcha (240 kilometers northeast of Addis Ababa). The BGI group is already marketing "Bati" beer locally and plans to produce "Castel" beer for export. The plant should be completed within three months and producing beer within six months. The owners intend to package and export cans of beer as well.

9. Because of its proximity to the capital city bars, the St. George brewery uses 75-80% of its production for draft beer in kegs and barrels. Demand for draft has been so high that they often ration sales to satisfy a wider clientele. The government allocated adjoining land to the new owners to allow expanded production beyond the current 20 million liter capacity. Most of the brewery's machinery (a combination of German and Italian) is very old so the company keeps a lot of different spare parts on hand for repairs. Although some new equipment was purchased during a recently planned renovation, the new owners are likely to scrap much of the old machinery and may eventually tear down the plant superstructure. Interestingly, St. George produces its own malt right on the brewery compound.

10. As a stipulation of the contract, BGI must retain the entire 500 person workforce, which Tadele estimated was 200 beyond the plant's needs. The staff will continue working per their contract but receive no increase in salary and cannot be replaced for at least five years. BGI is obligated to reconstitute and finance the pension program as well, contributing 6% percent of each worker's salary while the employee contributes 4%. Tadele said he will be replaced with new management but hoped to become the new general manager at the Meta Brewery outside of Addis Ababa.

Distinctive Beer from Harar:
11. The "Meta" brewery, which began operation in 1984, is located 30 kilometers outside of Addis Ababa. The fourth government-owned brewery -- "Harar" - produces several distinctive varieties of beer. The Harar brewery markets a Pilsner to compete with Bedele, St. George, and Meta, but also produces an increasingly-popular dark beer, "Hakim Stout" and a non-alcoholic beverage, "Harar Sofi," that appeals to the large Muslim population in the region and throughout Ethiopia. Bedele, Meta and Harar Breweries are on the list of companies expected to be privatized soon.

New breweries bring competition to a head:
12. Ethiopia's breweries are facing increased competition not only from new ownership but also because of additional factories. In addition to the new plant in Kombolcha, the South African Brewing Company (SABC) is building a brewery in Akaki at a reported cost of 300 million Birr ($41.5 million). The investors signed an agreement on October 12 for the lease of 21 hectares. SABC will put up 49% of the financing while an Ethiopian Firm, International Beverage Corporation, will cover the remaining 51%. The local press reported that the project will provide 800 new jobs within one year when the brewery becomes operational.

13. Two other new breweries are in the early stages of construction. The Star group of Ethiopian investors has laid the foundation for a plant in Nazaret, while a group of local investors affiliated with non-governmental organizations in Tigray are building the Dashen brewery in Gondar.

14. For further information, please contact the commercial section of the U.S. Embassy in Addis Ababa.
Tel: 251-1-550666, or 550399; fax: 251-1-550174, or 551944;
e-mail: (no capitalization).

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