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Meta Abo Brewery is trying to boost its market share in Ethiopia. Francis Agbonlahor is the Managing Director of Meta Abo Brewery which was recently acquired by DIAGEO, the world’s leading premium drinks company with a collection of alcoholic beverage brands across spirits, beer and wine. Capital’s Groum Abate sat down with him to talk about Meta’s expansion and the beer business in the country.

Capital: How is the beer business environment in the country now?
I would say the business environment is good, but it does not mean there are no challenges. The reason why we came here remains because we see Ethiopia as a strategic market. We are really privileged to be here. So overall I would say it is going well and we are dealing with challenges along the way. One issue I’m sure you are aware of also is getting the raw material for us to run production, that is one of the issues, getting foreign exchange to be able to import critical equipment and spares that we require can really be a nightmare in terms of the whole process you have to go through and the delays that results from that, that kind of bureaucracy creates a lot of challenges to international businesses like ours. But having said that, I think the Ethiopia environment remains positive, the GDP growth is still positive and it has worked out well with consumers and customers in terms of acceptance of the Meta brand and there are many more people who are switching to Meta beer, so in that respect I would say the whole environment remains positive. There are opportunities here and there are a number of challenges that we need to continue to deal with. That will be my assessment of what the business environment is like.
Capital: You have imported some equipment for an expansion project. Can you tell me any specifics about the expansion?
We were clear that when we came out here we were here for the long run. We came to Ethiopia not to just pass by. We are here and being here means we invest and we are investing. We acquired Meta brewery by paying 225 million dollars that was just the ticket to get here, and we are very proud that we got the opportunity to go into the whole privatization process and it was very transparent and very well managed. Having been here as you know the Meta brewery has not really received the type of investment it should have received over the years. As Diageo  we were clear that we needed to invest more in building capacity to boost production, but also with new technology, to be able to put the right capability and the right system to enhance production. So beyond the 225 million we paid to acquire the business, we have invested around 50 million dollars to expand the capacity. And in the last couple of days we have seen some of the equipment arrive, we made this investment just after we came out here, just after we acquired Meta and it has taken quite a while because they are brand new equipments that were being manufactured, now we are very pleased, in the last week we have started to assemble the equipment, we have received giant vessels over the last week, the vessels are called dual purpose vessels, these are vessels you use both for fermentation and maturation, they are brand new vessels. So these vessels have arrived last week and if you come to our brewery you will see a lot of construction, areas we expand our capacity, we were doing a lot of work before these equipment arrived and now that they are here, we continue with the installation process. A number of other equipment will also be arriving in the next couple of weeks as part of this expansion project. All in all what I can say is that with this investment we will double our capacity.
Capital: How about new products? You are going to launch one today and I think there are more in line to be introduced, can you tell me about that?
We are all about consumers, and we are all about customers. To us the consumers and customers are the key and we have had the privilege of having more consumers and customers becoming loyal to Meta beer and Meta brewery and I really appreciate them for that. We are beginning to form partnerships with a number of agents and customers all across Ethiopia and many more consumers are admiring the work we are doing and Meta beer. We believe that the Ethiopian consumers deserve the best and deserve consistent quality products and within that there are opportunities to do things differently in service of the consumers. Today we have a very special program, a really exciting event at the Millennium Hall starting about at 4:30pm. We have sent out invitations to our consumers, to our customers to our partners and friends of Meta Abo beer. It will be really exciting, I am sure you have been invited and I am hoping to meet you there, so let’s keep it like that for now. I can tell you that whatever we are doing today at the Millennium Hall is something that is really special and it is a service to our consumers because we believe that the consumers in Ethiopia deserve the best and we will be giving them the very best.
Capital: Do you have plans to make different kinds of beverages in the future? Apart from beer?
Well Diageo is the world’s leading premium drinks business. As you would know, we have an array of brands, fantastic brands all over the world in over 80 countries; in fact we have well over 200 brands. That creates a unique opportunity for us and for our consumers in Ethiopia. And just as we do in many of the markets we operate, we continuously look at innovation and renovation. We do that in service of the consumers. So in the appropriate time we will continue to look at what opportunities exist in terms of innovation in terms of new brands and look in house and see what we have in our portfolio that would be appropriate for this market, what the consumers will want and we will continuously look at those opportunities and then launch new brads as appropriate. This is all I can say for now.
Capital: What is your market share now, has it increased or does it remain the same?
We are doing well in terms of market share, in terms of many more consumers switching to our brands and compared to where it was, I think we have made significant progress not just in terms increasing  the number of consumers that drink Meta beer but also in terms of bars and agents that are willing to partner with us. When we first came here to acquire the business, in Addis Ababa for example, there were many bars where you would not find Meta beer, but now there is hardly any bar in Addis Ababa where you will not find Meta beer. And that is creating a unique opportunity for us and we are delighted and grateful for the vast audiences for agreeing to partner with us and for agreeing to stock Meta, to give the consumer a choice. We believe the consumers have the right to choose what they want to consume. If they want to consume this particular brand or they want to consume something else, they need to make that choice. We should not take that right to make that choice from the consumers. And that is what competition creates in every market. It is about choices and it is about giving people the opportunity to make that choice, we can determine what influences that choice, to choose A or B but if you have a station that only provides A or the only thing that is available is B that is not good for the consumer. We need to give them choices, that is what we believe and that is what we are creating. And we are seeing consumers making the choice to get back to Meta beer and or trying Meta beer for the first time. We are very happy about that.
Capital: Ethiopians consumption of beer is about 4 or 5 liters per capita, one of the lowest in Africa. Is that number increasing or will it increase in the near future?
Data is not available just yet; I think a number of things are involved in this market which is why I think it is really good to see the progress that has been made in this country in terms of investment in infrastructure, investments attracting foreign partners to come out here to invest in your country. I think one of the things that evolution will create is the availability of data. At the moment there is no way you can say that  is what is going on with consumer behavior indicators like the consumption rate. It is just not available. I cannot say at this point what the rate is in terms of consumption per capita but over time we should be able to determine what it is.
Capital: You have mentioned some challenges, one of the challenges is having enough bottles; you have to import them from outside. I heard you will be importing millions of bottles by next year. 
I think that will be a reoccurring problem in our business. From what we can see coming out here, the demand for new bottles is high with the local supply capability. So what you will find is a combination of local purchases and foreign purchases, we have had to import new bottles during the last 10 or 11 months we have been here. Based on the capacity that is given to us locally, we secured that. We are getting bottles from Addis Glass for example. We got bottles from them until they weren’t able to meet our demand, and then we had to import bottles the last couple of months. We wish we could get everything locally. In many other markets in Africa where we operate, we source our bottles locally, almost 100 percent of what we require. We’re looking forward sometime in the future, where we are able to source critical inputs like bottles, plastic crates, 100 percent locally because that creates a multiplier effect the value chain.
Capital: You also import plastic crates?
At the moment we’re not able to get the supply that we require locally. Whether there will be a decision we’re able to make, I will be sitting with my team in the next couple of days to look at and sit down with local suppliers and really be able to understand and secure the space for us, to give what we require, although we have to look out to supplement that. Our preference is to source as much of our requirements locally, rather than importing, which brings me to the whole local sustainable initiative where as you know we are working with Agricultural Transformation Agency (ATA), Farm Africa and Oromia Regional Agriculture Bureau to initiate the whole local value sourcing at the Oromia Highlands. And working with our partners we’ve been able to secure an arrangement with about 764 smallholder farmers to start growing barley that we can buy from them, that way we are creating a sustainable source of income for the farmers. We are also providing them, through our partners like Farm Africa and ATA, with new schemes, new technology, new ways of farming, and therefore building the overall capacity and capability of these small holder farmers. What we have started is small at the moment, a pilot project, we’re working with our partners and farmers to fully analyze and understand key facts, to be able to shape what happens in 2, 3, and 4 years and well into the future and for Diageo this is one area where we may use successes in other markets in Africa. Working with key partners and with farmers to grow grains that we can use as input and therefore significantly reduce what we have to import to the country is a win win situation for all parties involved. So, I’m looking forward to the day where we are able to source most of the three requirements locally, it’s some journey. It will require conscious and deliberate effort from all parties. We certainly can’t do it alone, that’s not our area, that’s not our area of competency, but we believe it’s the right thing to do, so that is why we started the project, and we are hoping that we can get the support of key partners and farmers to make it work for everybody.
Capital: Nowadays, events are all sponsored by beer companies, if someone wants to organize an event, she or he will definitely be sure that beer companies will sponsor the event. Some people are saying that the advertisements of beer companies like yours have gone too far or are out of line.
: We have our standards, our policies, our rules, including where we play and where we get involved. So first of all, don’t equate us with the pack, we have a clear strategy in terms of the choices we make, and everything we do is in the service of the consumers and customers. You would have also noticed in this respect that we promote responsible drinking; we were actually the first ones to start this when we came back in January because we believe alcohol should be used responsibly, its not meant to be misused, its meant to be enjoyed. DIAGEO has a purpose.  As the owner of Meta Abo Brewery, , our purpose is celebrating life every day, everywhere. What it means is that in the over 180 countries where we operate, people are celebrating with at least one of our brands, responsibly, and that’s why we promote responsible drinking and you will have seen a lot of that in adverts in the newspaper and in magazines and we train our employees specifically on how to ensure that their campaigning in the language, their behavior, their attitude is in line with our responsible drinking message. That applies to what we do in terms of sponsorship, not sponsoring everything and anything, that’s not who we are, we made a big call out and we said we want to connect with Ethiopian pride. And we know that Ethiopians value music and dance, and we partnered with Teddy Afro, not just sponsoring anybody, so we will do what’s right and believe what’s right for the customers and consumers. If others are sponsoring just anything, those are the choices that they’ve made; we don’t have influence over the choices other businesses make. They’ve got the right to make their choices. But we’re very clear about what our focus is, who we partner with, and what we sponsor, this means  meeting every local and international standards at all times, that’s what we stand for.