SABMiller to build Uganda brewery for US$80m

SABMiller to build Uganda brewery for US$80m

SABMiller will seek to relieve capacity constraints in Africa by building a second brewery in Uganda for US$80m. 

The brewery will be based in Mbarara in western Uganda, where consumer demand for beer is growing the fastest in the country, SABMiller said today (9 February). Once open in 2013, the brewery will double the capacity of SABMiller's local subsidiary, Nile Breweries, to 3.6m hectolitres.

Both SABMiller and analysts see capacity constraints as an immediate barrier to the firm making the most of growing demand for beer across large swathes of Africa. "They've warned that they have got capacity problems and that double-digit growth in volumes is unsustainable [in the short-term]," Investec Securities analysts said last month.

Overall beer sales in Uganda rose by 28% in volume for the 12 months to the end of December, driven by strong economic growth. Per capita beer consumption in the country is around eight litres, which compares to 60 litres in South Africa and around seven litres for Africa as a whole. 

SABMiller's MD for Africa, Mark Bowman, said: "The Mbarara Brewery will double our country-wide production capacity, create a significant number of jobs in the local economy and provide a secure revenue stream for local farmers." The facility will draw water from the nearby Rwizi river.  

It will produce Nile Breweries' major brands, including Nile Special, Club Pilsener, Eagle Extra and Eagle Lager. Eagle beers are currently brewed using sorghum, which is sourced from 9,000 local, smallholder farmers.

In 2009 and 2011, SABmiller has already spent $29m and $25.6m respectively to expand capacity at its Jinja brewery in Uganda and develop maltings and effluent treatment plants. In November last year, SABMiller said it would spend $260m to expand brewing capacity in the African countries of Zambia, Ghana, Uganda and Tanzania.