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All the breweries in Ethiopia have made an almost
similar price increase almost simultaneously.
Producer of the St. George Beer – BGI Ethiopia PLC –
for example, made a 90 Birr increase on the barrel,
and 30 Br increase per cask of draught beer, and on
a crate holding 24 bottled beers.
Harar Berewery Share
Company, located 526Km east of Addis Abeba, and
which dominates the Eastern Ethiopia market, on its
part added 95 Br and 30 Br respectively to its
original prices.
The price adjustment has brought about an increase
of 0.75 to 1.00 Br per jar of draught in Addis Abeba
and one to two Br in Burayu town of Oromia Regional
State, located in the western end of Addis.
“I have been drinking draught beer for the past 10
years and have seen lots of price increases in the
years. But I have never seen such a dramatic
increase,” says Neway Takele, one of Aniley’s
friends.
The last price increase on both beer types was in
January, 2007. Meta Abo Brewery – one of the three
state owned factories along with Harar and Bedele
breweries – located in southwestern outskirts of
Addis Abeba and established a little over 40 years
ago; as well as BGI, which produces well known brand
beers like St. George, Castel and Bati, had
increased the price of their 30 liters draught beer
barrel from 121 to 135Br. BGI’s St. George Brewery
was established in 1922. Similarly Bedele Brewery,
established in November 1993 and situated
approximately 483Km southwest of Addis Abeba in
Oromia Regional State, had increased the price on a
crate holding 24 of its three beer types, from five
to seven Birr as of January 23, 2007.
Harar Brewery also had made a 6.25 Br addition per
crate in the same time period.
The early price increase brought 0.50 Br difference
per jar of draught beer on consumers from the price
before the January 2007 change – 1.50 Br.
“The price increase has negatively affected our
business” said Dereje Gashaw, general Manager of
Bagdils and Hebrework Recreation center.
“We used to sell up to 10 barrels a day, but now
our sales have shrunk down to at least three.
Before the latest price increase there were groups
of people, like Aniley and his friends, whose
members used to drink 20 jars each. Their limits
have gone down to almost half, according to him.
The annual beer supply in Ethiopia is 3.5 million
hectoliters of which BGI produces the largest
amount. It brews 1.4 million hectoliters annually
while Harar’s share is 300 thousand hectoliters.
Despite the growing demand for beer in Ethiopia,
shortages of raw materials like malt and hops is a
major problem, experts in the sector believe. The
only beer malt producer in the country is Assela
Malt Factory (AMF) and it supplies only a portion of
what the brewers need. Established in 1984 with a
capital of 9.2 million Br it is the sole producer of
the raw materials used in the making of beer in
Ethiopia. The factory, which is located 167Km south
east of Addis Abeba, has failed to satisfy the
breweries demand. The reason for the shortages began
when farmers in the area, which supplied bakery
industry, decided to look elsewhere for business as
they claimed that AMF was not paying them on time.
The total annual
production capacity of AMF is 150 thousand quintals
while the total demand of the breweries reached in
2007/2008, 500 thousand quintals. AMF produced below
its capacity in 2006/2007 budget year, because of
the shortage of barley supplies. In the current
fiscal year it has managed to produce 167 thousand
quintals as it has resolved its prices dispute with
farmers, Kiros Abraha, general Manager told
Fortune.
Three years ago, the price of beer barley was 250 Br
per quintal and it had doubled last year. Though AMF
entered the just ended fiscal year with anticipated
price of about 630 Br a quintal, the current price
in the area is between 700 and 750 Br. “We are out
of the market. We couldn’t predict the market,”
Kiros said.
Cereals account for almost 80 pc of all temporary
crops grown in Ethiopia. Of the cereals, teff
constitutes a little more than a quarter of total
cultivated area (26 pc) followed by maize (24 pc),
sorghum (17 pc), wheat (15 pc) and barley (13 pc).
The distribution of these cereals is strongly
influenced by elevation according to Ethiopian
Agricultural Sample Enumeration 2001/2002 by the
Central Statistical Agency (CSA). Teff grows
throughout the highlands while wheat and barley grow
in higher and cooler environments, according to CSA.
The particular barley variety that is used for beer
malt grows widely in Arsi and Bale zones of Oromia
Regional State. In the past five years the demand
for this commodity has increased because, of its use
for Tella – a traditional fermented drink –
Kolo (roasted barley) and Besso – a
food type prepared from barley flour, has been used
for bread as well, according to an Agronomist at the
Ministry of Agriculture and Rural Development (MoARD).
Another Agronomist from the Kulumsa Agricultural
Research Institute agrees with this idea, but adds
that the main reason for farmers not supplying to
the factory is because merchants provide them with
better prices.
Due to the shortages in the supply inputs from local
sources, AMF resorted to importing, a scheme it had
stopped three years ago. Accordingly, it has floated
an international tender for the purchase of 50,000
quintals of barley and the tender will be opened in
two weeks.
“This purchase will help us survive in the market
till the next local harvest of barley comes to the
market,” said Kiros.
AMF sold a quintal of malt for 670 Br between June
and August, 2007, but the current price is 1100 Br a
quintal. The factory supplies only to the three
state owned breweries (Harar, Meta Abo and Bedele)
satisfying about 60 pc of their demand. The Harar
Beer Share Company, for example, needs 70,000
quintals of malt a year and AMF supplies it with
just 50,000 of it.
The two private breweries, BGI and Dashen – a
company that recently introduced a new beer brand
called Royal, entirely depend on imported malt.
The local breweries have on average bought a quintal
of malt for 1420 Br in the international market.
This consignment was bought from German, where the
price of beer has shown a 15 per cent increase in
the past two months, due to Australia’s barley
harvest loss because of frost; and the shift from
barley cultivation to Biofuel development, a source
close to the sector told Fortune. The price
has also increased in Africa.
Aniley and his friends
do not agree with this justification, though. “Does
Ethiopia not have a large acreage for barley? How
come it imports?” they inquire.
The subsequent decrease in the number of beer
consumers following the price increase would be
temporary, General Manager of Harar Beer Share
Company, Jundi Basha told Fortune. He hopes
consumers will eventually understand why the
increase was necessary.
The AMF has already started a 150 million Birr worth
expansion project to increase its production
capacity by 150 thousand quintals in a bid to meet
the growing national demand. As the expansion work
includes imported technologies, the cost has to be
mainly in foreign currency. The Privatization and
Public Enterprises Supervisory Agency (PPESA) – a
government body that controls AMF along with other
state enterprises – is, however, dubious about the
project and ordered the malt factory to delay 66 pc
of the expansion project for about two years and
work on expansion that brings about additional 50
quintals production capacity.
AMF already started a
process to open a three million Euro Letter of
Credit (LC) account for the purchase of machineries
for the initial stage of the expansion work. For the
next stage of the project, which PPESA said should
be undertaken after two years, it will need more
than five million Euros.
Fortune’s reporter, who visited some bars,
restaurants and recreation centers that sell draught
beer in Kazanchis and Hayahulet areas on Sunday,
Monday and Tuesday, witnessed that the number of
customers has declined compared to previous weeks,
and people who usually drink draught beer are now
shifting to wine.
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