UK: SABMiller to source more raw materials locally

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SABMiller has announced that it will "significantly" increase local sourcing of raw materials for its beers, citing clear commercial advantages.

SABMiller said today (8 December) that, by 2012, it aims to increase the number of smallholder farms it uses for raw materials by 15,000 worlwide. A spokesperson told just-drinks that this would mean doubling the number of smallholdings the group works with. 

UK-listed SAB has committed itself to ten sustainable development priorities, including local sourcing, reducing water usage and tackling the spread of HIV/AIDS.

The brewer said that local sourcing in emerging markets was increasingly attractive, particularly in India, parts of Africa and Latin America.

"In each market, this has solid commercial objectives, ranging from benefits in improved quality, creating new affordable products, security of supply and generating savings on import costs," the brewer said.

The firm declined to put a figure on potential cost savings or initial setup costs.

In India, SAB has worked with a number of local authorities to devise a partnership scheme for barley farmers, called the Saanjhi-Unnati Program.

Member farmers get seeds and support through the scheme, but are not forced to sell their barley to SABMiller if they can get a better price elsewhere, the brewer said. SAB estimates that around 60% of the farmers are selling their produce back to the brewer.

A plethora of smallholdings dominates India's rural landscape, with barley farmers owning less than one hectare each on average. Average yields are 1.1 tonne per hectare, compared to 2.5-3 tonnes in Europe. 

SABMiller CEO Graham Mackay told a sustainable development conference in London last month that the global financial crisis would not jeopardise the brewer's commitments.

"When I look at our ten sustainable development priorities...I do not see how we could remain competitive if we invested less in these core business activities during difficult economic times."

Sectors: Beer & cider

Companies: SABMiller

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