Comment - Beer - Frank said it best
Is beer good for you? The health benefits and drawbacks of beer have long been studied and debated. But is beer good for your country? Most definitely, conclude Larry Nelson and Frank Zappa.
By almost every measure, the brewing industry has transformed over the past decade. The strongest drivers have been internationalisation and consolidation - twin tornadoes of change which have reshaped the global structure for beer companies. Names once proudly independent, most recently Scottish & Newcastle, FEMSA, and Anheuser-Busch, are now part and parcel of truly multinational behemoths.
As brewing concerns have grown in size and sophistication, so too has their understanding of the role they play in society. It has just been over a decade since the first corporate citizenship reports were published. These reports were sometimes difficult to compare, given the different measures utilised, were spotty in their target setting, and focused largely on environmental concerns. In the early days, some companies didn’t bother to issue reports annually. Others, such as InBev, joined in late.
Today the sophistication of multinational brewers in articulating their citizenship activities has improved substantially. Even the use of ‘citizenship’ is a bit passé; the new byword is sustainability, incorporating the traditional strands of improving environmental performance, as well as reducing the harmful effects of excessive alcohol consumption.
What’s emerging is a better understanding of the important roles brewers play vis-a-vis their stakeholders, be they employees, shareholders or suppliers but especially in regard to the communities in which they operate.
Or should that be countries. There’s a strong case to be made that, in regards to developing economies, the brewing industry is a change driver. This is a topic that is and will continue to entertain economists for many years but rock legend Frank Zappa has helpfully distilled this argument down to its simplest form. Regarding countries, he infamously commented, “You can't be a real country unless you have a beer and an airline. It helps if you have some kind of a football team, or some nuclear weapons, but at the very least you need a beer.”
(Zappa, BTW, reduced the failure of communism down to the idea that “people want to own stuff”, and his thoughts regarding the quality of rock music journalism were, suffice to say, pretty harsh.)
A brewery in a developing economy is a marvellous thing. Firstly, it provides a tax base. It’s very hard to slip large shipments of beer past a brewery gate without someone noticing; in some instances, such as in Heineken’s brewing operations in Sierra Leone, government officials are actually located within the brewery.
In the care of a modern brewery, beer is a wonderfully healthy product, in contrast to alcohol produced informally, with street vendors offering spirits produced from God-knows what ingredients and methods. Its presence should encourage consumers to switch – or be encouraged indirectly by government – from consumption of higher-proof alcoholic drinks. Witness Russia’s further clampdown last month on vodka sales.
But most importantly – and here is where economists, nation builders and followers of deceased rock legends should really be excited – is the extent that a brewing operation develops the formal economy, especially in regards to agriculture. In sub-Saharan Africa and in India, brewers such as Heineken, Diageo and SABMiller and their operating companies are working with tens of thousands of largely out-of-the-formal-economy farmers to grow the raw material building blocks of beer.
Barley isn’t really a suitable crop in many regions, so sorghum and other cultivable starch sources are being planted, in some instances pushed and aided by governments. Nigeria led the way in this regard 20 years ago; others are coming on stream now.
How important are brewers to an emerging economy? Ten years ago then SAB-owned Tanzania Breweries Ltd estimated that it accounted for 2% of the country’s gross domestic product. In today’s war-stricken Sierra Leone, Heineken believes that it contributes the majority of the country’s tax revenues to the Government’s coffers.
This emphasis is not to overlook the other work that multinational brewers undertake in sub-Saharan Africa, such as controlling the spread of HIV/AIDs and other diseases by providing well above state level (in most instances) medical care. In some instances, brewers are more a non-governmental organisation than a business, as with Heineken’s establishment of its Africa Foundation, funding projects such as a manufacturer of mosquito netting in Rwanda.
Reading from the top of this column, you may by now be labouring under the mistaken impression that all of this activity is recent. Not so; the point is that brewers are much more aware of their roles in society, in essence the social contracts under which they operate, and are articulating this more clearly and forcefully. Society demands accountability; brewers are able to respond in kind, providing evidence of leadership.
Brewers have been working as integral parts of developing economies since virtually day one. In the late 1960s, when Malawi was taking its first steps as a newly-independent nation, a mission of Danish government aid officers visited the country and proposed building a dairy. The Malawians, mulling over this generous offer, came back and suggested an alternative – a brewery. There’s a Carlsberg brewery in Blantyre, the country’s largest city, to this day.
Frank Zappa, it seems, knew a thing or two about the importance of beer and brewers.
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