South African Breweries in Tanzania
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South African Breweries in Tanzania
1. There are many factors that contributed to SABs entrance into the Tanzanian market. It all started when SAB observed the new trend of brewers in developed markets eyeing places like Latin America, Asia, and Africa as new business prospects. Instead of allowing a larger company to come in and buy SAB, the company prepared to become a part of the global market and compete with major companies. The company began by expanding to countries such as Swaziland and Lesotho, but it did not constitute as major globalization because these countries were still within the South African borders. South African Breweries could not expand beyond the border between the 1970s and the 1990s because of their apartheid government policies which maintained their cultural identity and continued racial oppression towards the majority black South African population. In 1993, the government approached SAB to take over production at their failing Tanzanian Breweries located in Eastern Africa. SAB agreed and invested 22.5 million dollars in what would be their first expansion beyond South African borders. Considering Tanzania was one of the 5th poorest nations in terms of GDP, it was definitely a risk for SAB to invest in Tanzanian Breweries. I think it was a good decision because it was their first opportunity to actually expand beyond the South African borders and if they really wanted a shot at globalization then I think it is a risk they had to take.
2. South African Breweries were successful when they invested in Tanzanian Breweries because of various factors. The first thing the company did when they went in was bring in second hand equipment from the SAB factory, that was far more efficient than the machines present, and trained the existing and new employees to better and speed up production. Niemandt saw their haphazard way of brewing and immediately corrected the issues at hand. Tanzanian Breweries were receiving all of their goods needed on the supply chain from unreliable sources that made the beer scarce to distributors and poor in terms of quality. As a result of the new training and the better machinery production volumes increased 15 percent. The second step Niemandt took was to thin out the number of distributors that Tanzanian Brewery usually did business with. He demanded that the remaining distributors meet a high quality of customer