It’s different doing business in Southern Sudan. Just ask Ian Alsworth-Elvey. The MD of SABMiller ’s newly upgraded Juba plant spends a lot of time, as does anyone in the beer business, thinking about logistics. But here it is somehow different.
"If you ask how far it is to Torit, the capital of East Equatoria (the neighbouring state to Central Equatoria, where Juba is located), they will tell you in the dry season one day, in the wet season four days. Very few people know the actual distance," he says, adding that it is, actually, 144km.
That outlook makes sense in a region of almost 600000km² — about the size of Madagascar — where only about 100km of roads are paved.
It can take up to two weeks for delivery trucks to get to locations only 400km away, says Alsworth-Elvey, MD of Southern Sudan Beverages, as the local company is known.
It’s not just transport that requires a different tack. Setting up a business in a country that literally has nothing is a tale of persistence. Securing land, finding skilled staff and just coping in a place where there is no established legal system to guarantee intellectual property, are all hazards the company has had to deal with.
At least there is plenty of water — it comes by pipe from the Nile river, 5,2km away.
The 10-province region of Southern Sudan, whose 8-million people are due to vote on independence from the northern Khartoum-led government next month, may have an uncertain political future, but its value as a beer market is clear, he says.
The per-capita consumption of beer in the region is just one litre a year. The African average is six litres. (In SA, the figure is considerably more, at about 55 litres.) Mark Bowman, the MD of SABMiller Africa, estimates the continent as a whole could support an average consumption of 12-15 litres.
But beer remains an expensive drink in Southern Sudan and the company is counting on economic growth to make it more affordable and raise consumption.
Here, people have to work an average of 7,5 hours to buy an average serving of beer. The East African average is five hours and in SA it is one hour, while in Europe it is just 12-17 minutes.
"Beer in Africa is quite a premium product. Actually, it’s a very aspirational product," says Alsworth-Elvey.
While it bodes well for the future, doing business in the present is not easy. Building a plant in a place where there is hardly any infrastructure takes more effort.
The brewery, which opened in May last year, has four diesel-powered generators — three of which run at any one time — giving the 2,5MW it needs to run. The plant manages its own landfill site, to avoid using the local garbage dump — "an environmental nightmare", as the South African-born MD calls it.
When hiring local staff — there are 253 locals and 11 expatriates at the plant — the company couldn’t rely on formal education levels to make decisions, as few people had any beyond some secondary schooling. The company used tests to check for what Alsworth- Elvey calls "trainability" and natural intelligence. "That became our criterion for recruiting people. We recruited people and have just put in hours and hours and hours of training them."
For a company used to doing business in developing countries, such hurdles were, perhaps expected. Others were not.
When he and some colleagues were scouting for possible sites for the planned brewery, government officials unused to dealing with inward investors — or with the local landowners in such cases — sent the visitors from SABMiller out, armed with the co-ordinates of some possible locations. They did not, however, tell them that the land belonged to local communities and that they would have to get their buy-in first. It didn’t take long for problems to arise.
"We’re thinking of building a brewery," Alsworth-Elvey remembers telling the chief of one site they visited. His angry response soon disabused them of that notion.
Realising they would have to get the buy-in of any community whose land they used, they changed tack and "put out feelers" to communities willing to put up their land for investment . The new approach worked and the land on which the plant outside Juba is built is neither leased nor bought from the local community.
"They are paid a royalty based on production. They have a vested interest in making sure our business grows."
Other problems then arose. Given that Southern Sudan is a region in the process of establishing its independence from the north, it is creating its own legal system. But with this not in shape, it brought additional challenges ahead of the company’s launch last May of White Bull, the lager it had developed for the local market. It had to keep the launch brand under wraps until it was actually rolled out, as there was no way of registering the name.
"It was all done so covertly. My biggest fear was that I was going to go into the market and our competitor had (already) put out a White Bull."
The problem was that there was no way of registering the brand of an alcoholic beverage in a country officially under Islamic Sharia law.
"We could own intellectual property, but we had to do that in Khartoum. You can imagine how amenable they would have been to register intellectual property on an alcoholic product!"
That has changed and the government of Southern Sudan now has the ability to register intellectual property.
Southern Sudan Beverages is the only foreign manufacturing investment in the region at present. Its biggest competitor, Nairobi-based East African Breweries (EABL), owned by UK drinks giant Diageo, imports all its product. EABL, which makes Kenya’s well known Tusker lager, doesn’t rule out producing locally, but is not planning to do so any time soon.
"The broad consumer offering we provide together with the strong equity of our brands and our operational proximity mean that we are confident in our ability to continue to grow our brands in the region and we are well positioned to maintain our leading market share," a spokeswoman says.
This makes Southern Sudan just the latest battleground in the growing war for beer drinkers taking place across the continent.
Describing his experience as "the case study" for foreign investment in Southern Sudan, other investors are going to find it easier going than it has been for him, Alsworth-Elvey says.
One problem remains, however — and other foreigners doing business in Juba make the same observation.
It is not about the legal system, local communities or a local lack of skills. Rather, it comes from foreigners, especially in the US, who remain unwilling to do business with the company, thinking, erroneously, that Southern Sudan is subject to the same sanctions as the Khartoum-led northern half.
