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BEER FOR ALL: SABMiller in Mozambique
MGMT 205: International Business

Discuss the local conditions that make SAB Miller’s traditional model unsuitable for Mozambique.
SABMiller’s traditional model was based on repeating well-known processes worldwide and was heavily reliant on global supply chains. This approach proved to be the most suitable option for entering and operating in rich countries, where SAB Miller could benefit from short and cost-efficient supply chains. Furthermore, the high demand of commercially brewed beer, which was globally based on malted barley and hops, allowed them to pursue a mass-production strategy.
In Mozambique on the other hand, the demand for commercially brewed beer was, with an average per capita consumption of 8 liters per year, very slim. Yet, there was a huge market that wanted to drink beer but could not afford to because many people in Mozambique were living in poverty. That is why the price was their major decision criterion when it came to buying alcoholic beverages. As a result SABMiller´s potential low-income customers would rather satisfy their needs with considerably less costly homebrewed beer or even dangerous alcohol from the unregulated and untaxed illicit alcohol market, than with SABMiller´s relatively expensive commercial beer. In order to offer a legal alternative, the brewery had to cut costs even more.
Therefore the brewery had to start using locally grown cassava as a new raw material, as it was very costly to import the traditional key ingredient malted barley. By doing so, SABMiller could no longer take advantage of its initial mass-production strategy and the existing supply chains to drive down costs. In fact, the company had to build a completely new supply chain.

However, managing the long and expensive supply chains in Mozambique was logistically challenging and very costly as the

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