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Draught sippers at one of the town’s famous pubs
commonly known as Bole 23 Kebele enjoy their drink
sitting in every corner of the compound, seemingly
unbothered by the recent price hike of the bubbly
beverage. “I’m enjoying my drink and I don’t think
that the price increase is worrisome for many
customers here in the Kebele,” Nebil Seyoum, 45,
told Fortune, taking a sip from his mug of
St. George.
This public recreational area, located near the
recently built Millennium concert hall, serves
hundreds of customers every day. According to
Selamawit Teklemariam, the head supervisor, more
than 21 barrels of different varieties of draught
beer, which translates to around 520 litres, is
consumed there everyday, with no signs of letting
up.
“The recent price hike, the cause of which is still
unknown, hasn’t brought any complaint from our
customers. So, there’s no decline in the draught
market following the price hike,” she added.
The Ethiopian draught beer market has recently
witnessed an increase in price from every major
company. Major breweries contacted by Fortune
have attributed the price hike to a staggering
increase in the price of malt and hopps, two of the
major inputs used for making the drink.
Accordingly, the factories have made a price
adjustment that has made its presence felt
throughout the nation.
BGI Ethiopia, the producer of Bati, Castel and St.
George Beers, produces 65,000 to 70,000 hectolitres
of St. George draught beer every month. The company,
which acquires St. George Beer factory, established
in 1923, for 10 million dollars in 1998, is one of
the companies that have made price adjustments
recently. This factory, which controls 70-75pc of
the local draught market, boosted prices on December
1, 2007. “Considering the significant price increase
in the main ingredients used for making the drink,
we have made a fair price adjustment,” the company’s
sales and marketing staff, who spoke on condition of
anonymity, told Fortune.
According to the information obtained from Assela
Malt Factory, the nation’s largest, the increase in
demand for the product and a concomitant decline in
supply as farmers switch to better-paying crops have
caused the shortage of malt in the local market.
The factory, which produces 150,000 quintals of malt
every year, will also be closedfor expantion
beginning December 21, 2007, which will further
aggravate the situation. Kiros Abraha, general
manager of the factory, contends that the factory
covers only 40pc of the local demand for the product
while the rest is imported from other countries like
Germany and Belgium.
“While the malt that is imported from abroad has
escalated to 1,490 Br per quintal, our malt, which
was available for 460 Br per quintal a few months
back, is now sold for 950 Br,” he told Fortune.
“The situation could further worsen if farmers are
not encouraged with better incentives to grow the
crop.”
Ethiopian farmers who produce the barley which is
used for making beer are mainly located in the Arsi
and Bale regions. Currently, they are shifting their
productions to other crops like maize, wheat and
other grains. The main reason for this is that they
will get more money by harvesting crops other than
barley.
“For example, a hectare of land could yield more
than 30 quintals of wheat, whereas a farmer could
harvest only 20 quintals of barley,” Samson Argaw,
an expert at the Ministry of Agriculture and Rural
Development (MoARD), told Fortune.
Meta Beer Factory, which opened up business in 1966,
is the other brewery of draught in the country that
has increased the price of draught it sells
beginning from December 3, 2007. Solomon Kebede,
general manager of the factory, is of the opinion
that though an unfortunate mix of events has hurt
supply of the most important ingredients used for
making draught, the demand for the drink has
remained unabated.
“We used to sell 30 litres of draught for 150 Br.
The same amount now goes for around 190 Br, which is
still profitable, as retailers could make a net
profit of 60 Br out of it,” he said.
The synchronicity of the price increases being
instituted by major beer makers has brewed suspicion
that the factories have collaborated like a cartel.
“The factories have made the price adjustments at
almost exactly the same time. This may show us that
they are taking advantage of their little presence
in the market, thereby increasing price as they
think it fit,” Sintayehu Birru, one of the
beer-drinking customers of Tirigne Restaurant,
located under the national stadium, told Fortune.
General Managers of Meta and Harar Breweries have
confirmed to Fortune that the two companies
and Bedele Beer Factory have talked by phone about a
possible price increase to adjust to the rising cost
of the ingredients.
Nevertheless, Wolday Ameha, head of the Ethiopian
Economic Association, explained to Fortune
that since these three factories are owned by the
government, it is not illegal for them to collude in
raising prices.
“They are considered to be owned by one body so that
they can make decisions collectively. However, this
would have been a disaster had the private factories
done so, because that would be considered to be
against anti-trust law,” he contended.
BGI Ethiopia, for its part, asserts that it has made
the price adjustment on its own, and that it has not
contacted any of the other beer companies with
respect to the decision.
Harar Beer Factory, which sells draught only in its
vicinity, has also raised its draught and beer price
beginning from the first days of December. Juneydi
Basha, general manager of the factory, believes that
the next few months will see no improvement in the
supply of the inputs as the process will take a long
time to work out.
“We do not know what the future holds for us. I
think that we are going to import the inputs from
abroad as the local market cannot provide us
according to our demand.”
This may mean that Ethiopian draught fans, like
those found in Keble 23, should have to continue
paying a little more money till things calm down.
“Paying four Birr for a draught that is a little bit
less than one litre is not that bad. It may become
our concern if the factories cross the line and make
the price unbearable,” Nebil concluded, taking the
last sip of his draught.
Ethiopia has one of the smallest number of beer
factories when compared to other African countries.
The five factories operating in the nation, however,
are widely known for producing a beer with a special
flavour which many attribute to the quality of the
inputs that are purely natural.
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