Although underdeveloped, Mozambique's beer industry has a long history and a bright future. Home to one of Africa's most-awarded beers, Laurentina, the country is now a battleground for Heineken and ABInbev, two of the largest beer companies on the planet.

It might come as a shock to the majority of beer devotees out there, but Mozambique is world famous for its beers. Don't just take our word for it. Laurentina, the most prized of all beers in Mozambique, is in fact one of the most-awarded beers in Africa. In 2019, it received a gold award from Brussel-based Monde Selection, an institute that has been evaluating consumer products since 1961. It comes in two versions: Laurentina Clara, a pale lager, and Laurentina Preta, a dark lager.

First brewed in 1932 by a German master brewer who was hired by George Cretikos, a Greek immigrant who owned a beverage factory in Lourenco Marques (present-day Maputo), Laurentina is currently exported to the EU, the UK, and South Africa. Notably, it was named Laurentina in the honor of the inhabitants of the Mozambican capital. Today, Laurentina is produced by Beers of Mozambique (CDM), a 23-year-old company that resulted from the privatization of the former Sogere brewery in 1995. Apart from Laurentina, CDM produces other flagship brands such as 2M (pronounced Dos Em), Manica, Impala, and Castle Lite, and markets global brands such as Budweiser and Stella Artois. CDM is partially owned by South Africa-based SABMiller, which holds 49.1% of the company's shares. Interestingly, in 2016, SABMiller was acquired for USD100-billion by the ABInbev group, one of the largest brewing companies in the world and the owner of more than 200 brands, including Budweiser.

With three breweries in Mozambique, one in Maputo, one in Beira, and one in Nampula, ABInbev enjoyed little to no competition in the country until 2017, when international giant Heineken announced its decision to invest in a USD100-million brewery with a production capacity of 0.8 million hectoliters. Soon after, in late 2018, ABInbev responded to the threat from Heineken in kind with a decision to invest in a USD180-million brewery with a production capacity of 2 million hectoliters. Whereas the Heineken brewery entered into production in March 2019, ABInbev's new brewery only carried out its first production test in early 2020. Most importantly, much to the benefit of the end consumer and the local economy, this rise in competition has pushed both companies to find new ways to capture market share and establish their standing in a growing market. While Heineken is sourcing maize for its new Txilar brand from over 1,000 Mozambican farmers, setting up sustainability campaigns such as the Praia Zero project and sending employees for training to other countries, ABInbev is investing in green technologies to reduce the company's heat-related carbon dioxide emissions. Although Mozambique's beer market is still underdeveloped, with consumption at 12 liters per capita, it has been growing rapidly of late on the back of encouraging socioeconomic fundamentals. With two of the world's largest players battling for market share in the country, the only way is up.


Wise Words

Aluminum Shower

BHP Billiton has decided to focus on five business lines, and is withdrawing from aluminum. How will this impact the company?In August 2014 BHP Billiton announced its plans to demerge its aluminum, manganese, and nickel and silver businesses along with some of its coal assets. Subject to board and shareholder approval, there would be a new company operating these assets under the name of South32, and Mozal will become quite a significant part of it. South32 will operate in five countries and be staffed by approximately 24,000 people. The business will then transition from a commodity-based structure into a regional-based entity, and Mozal will report to the African regional office located in Johannesburg. The new company will have a dedicated board and management team with a significant representation at the Johannesburg office, which will be greatly beneficial for Mozal.How would you describe the evolution of Mozal's contribution to GDP?Since the company was established in 2001, Mozal has continued to play a prominent role, contributing around 7% to GDP. We recently won an award from President Guebuza in recognition of this contribution. Currently, Mozal produces just below 570,000 tons per annum of primary aluminum ingot, with production entirely destined for export, mainly to Europe, the primary market for Mozal's metal output.What are your plans to support the domestic use of aluminum?There has been a spiking development in Mozambique's downstream industry. There was no other local market established until the development of Midal. We began delivering to Midal in October 2014 and once they ramp up their operations, we will be delivering 50,000 tons of metal per annum. Businesses can now be established downstream of Midal, creating an increased diversity of products in the downstream industry, while a unique service industry will also develop around Midal. I expect our relationship with Midal to be long term and sustainable for many years to come. The sizeable tonnage of aluminum that company will be receiving from us will be a major catalyst for the downstream industry.How would you categorize the significance of Mozal in other sectors?Mozal has played a significant role in infrastructure development, with road-access projects and a new port facility. For example, Mozal imports more than one million tons of alumina per annum through the port, which is then brought to the site by trucks. We also transport the entirety of our final product through the port, which is a considerable contribution to the transport industry.In addition to that, we continue to perform road maintenance even though it was not a part of our initial undertaking. We also direct around $2 million per annum toward our community work, some of which has gone into the construction of schools. To date we have built nine primary schools, a secondary school, a technical school, and a maintainer-training center.What challenges do you foresee over the next ten years for Mozal?One major challenge will be electricity supply. We have managed to cope with this so far by working closely with ESKOM and focusing on our productivity and operational efficiency to get more out of the available infrastructure. We have made good progress and have implemented a system we call Maximum Technical Capability. The other challenge is with commodity prices. This has been a challenge over the recent period, although Mozal has been effective with regards to cost cutting, as we have been able to focus extensively on efficiency. We also pay considerable attention to skills. All of the potential development in the country and the exploitation of its resources will result in a great need for a skilled workforce, which will present a challenge for the entire industry. 6

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