Brewers seek local raw materials to offset production costs

The country’s two alcoholic beverage manufacturers have turned their attention growing raw materials locally in an attempt to make up for production costs as the prevailing Eurozone crisis continues to drive up prices of grains used in the brewing process including barley, wheat and rye.
Inside SKOL Brewery . The New Times / File.
Inside SKOL Brewery . The New Times / File.

The country’s two alcoholic beverage manufacturers have turned their attention growing raw materials locally in an attempt to make up for production costs as the prevailing Eurozone crisis continues to drive up prices of grains used in the brewing process including barley, wheat and rye.

Economically, troubled Europe is the source of most of the raw materials used by the two local brewers, Skol Brewery and Bralirwa, which means that that any shift in prices and supply of barley affects the local beer industry. Barley is the most commonly malted grain in production of beer locally and regionally.

“We plan to have supply of locally grown products (raw materials) that have sufficient and reliable supply, this is very important,” said Thomas Weingarten, the Managing Director of Skol Brewery.

The brewer has begun to make use of rice to cut on raw material costs for its latest brand on the market, Sol Gatanu. Rice now accounts for 30 per cent of the brewer’s raw materials.

SKOL brewery has entirely been dependent on barley, which is not produced locally.

On its part, the country’s leading brewer, Bralirwa, has partnered with a local maize processing firm, Minimex, to produce maize on 700 hectares in Eastern Province.

The Heineken-owned brewer uses maize as a raw material to manufacture some of its brands including Turbo King.

Farmers are buoyant that the decision to source for raw materials locally would expand the market and boost the prices of their produce.

Some of the cereals used in beer manufacturing but are produced locally include rice, maize, wheat and sorghum.

“This helps us because if we are sure of the market, it means that we can increase production and earn a lot,” Oswalde Munyaneza, a farmer told Business Times.

Francine Musabyimana, a maize farmer said that this will help farmers to specialise on production of the cereal thus increasing output.

“I don’t need to grow many different crops because I am not sure of what will have in the market,” she said.

Analysts say the move will also encourage government’s efforts to spur rural growth and reduce poverty through increased incomes for farmers.

But thus far, brewers have put their focus on cutting other costs such as energy, increased marketing investments, and efficiency improvements in the supply chain to offset costs incurred in the importation of raw materials.

“We are focusing on top line growth, increased cost controls and improved supply chain efficiencies,” Jonathan Hall, the Managing Director of Bralirwa said in a recent interview with Business Times.

 

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