New Orleans In Nariobi the question in a bar that always made you step back and think if you ordered a beer was whether you wanted it cold or warm, meaning at room temperature. Given the state of refrigeration and the cost of electricity in the country, so many people had gotten used to drinking beer warm that it had become a matter of choice. Now it seems things are changing because fierce competition among big international brewers has led to the introduction of cheaper beers in order to try and grab more money from the poor by hooking them on the lower prices. Unbelievably, this push has government support.
Today, legal beer sales are only about 1% of total consumer spending in Africa and the Middle East, but two brewery giants, SABMiller and Diageo, have set their sights on making Africa where they will see their big expansion in coming years. To do so, according to a surprisingly good article in the Wall Street Journal, they had to solve two problems: “packaging and price.” By negotiating agreements with seven different African countries to reduce taxes on beer, allowing the companies to make up the lost revenues through increased volume in sales, they won their tax breaks. On packaging they started serving beer right out of the kegs rather than the bottles. In a country like Kenya this has moved Senator, a beer that luckily for the company was introduced the same year that Barack Obama was elected U.S. Senator, to the top of the heap, costing only about a quarter a beer, as opposed to traditional favorites like Tusker or the ubiquitous home brews in the slums of Nairobi and the countryside. The companies also claimed or conned the governments by saying more beer consumption would increase demand for farmer’s crops.
Sure this all sounds crazy, but as I have talked about in Citizen Wealth, there are lots of companies that have made billions by focusing on how to separate the poor from their few pennies. In Africa the lineup of course includes fast food companies as well like Yum Brands and of course Walmart.
The health impacts are horrendous. Regulation is nonexistent. The exploitation is stark.
It is frightening to watch a disaster unfolding, even at a distance.