BEER FOR ALL: SABMILLER IN MOZAMBIQUE
SYNOPSIS
SABMiller, the second largest brewer in the world after Anheuser Busch InBev, has developed a business
model in Mozambique that represents a radical departure from the organization’s traditional approach to
beer production. SABMiller, a multinational company with well-developed global supply chains and
various levels, SABMiller develops a low-cost beer, called Impala, by using local cassava sourced from a
combination of rural smallholder farmers and some larger commercial farmers. In a marked departure
from SABMiller’s corporate best practice, the manufacturing process begins outside of the brewery and in
the vicinity of the scattered and rural cassava farming plots where SABMiller’s technology partner, the
CASE OBJECTIVES
Through discussion of this case, students should examine and explore the following:
CASE POSITIONING
corporations (MNCs) can successfully enter low-income markets, which is well illustrated in this case, as
SABMiller balances the sales of its premium brands with sales of its newly developed low-cost beer
products.
The case illustrates disruptive, frugal product and process innovation, thus serving as an introduction to a
range of innovation concepts. SABMiller shifts to an open innovation strategy for the Impala business
1. Describe the Mozambican context from a social and economic perspective.
2. How has SABMiller shifted its traditional model to suit the Mozambican market?
Theme B: The Role of Business in Society
6. Is SABMiller contributing to the Mozambican economy? Should it be concerned about the role it
plays?
1. Describe the Mozambican context from a social and economic perspective.
In discussing this question with students, the instructor should encourage the class to look at
macroeconomic variables holistically, focusing not only on growth rates and per capita incomes but also
on quality-of-life indicators, such as the Human Development Index (HDI), which provide a deeper
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understanding of market conditions. The instructor may mention the importance of immersion1 and the
collection of qualitative data prior to designing a business model. This discussion should also help
students see how well the cassava-sourcing model developed by SABMiller, through its local subsidiary,
The following are additional relevant points to discuss with regards to the economic development of
Mozambique:
Theoretical Perspective: Resource Dependence, Food Security, Economic Diversification and Structural
Transformation
Global food production systems have experienced significant and growing strain as a result of a
combination of population growth, industrialization and climate change.4 According to the World Bank,
According to Timmer and Akkus,6 structural transformation involves four main events:
a falling share of agriculture in economic output and employment, a rising share of urban
economic activity in industry and modern services, migration of rural workers to urban settings,
and a demographic transition in birth and death rates that always leads to a spurt in population
growth before a new equilibrium is reached.
2. How has SABMiller shifted its traditional model to suit the Mozambican market?
The instructor can begin the discussion by asking students which local conditions and regulations make
the firm’s traditional model unsuitable for Mozambique and which aspects of its traditional model will
need to change.
The instructor should ensure the following points are covered:
Theoretical Perspective: Ambidexterity
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The international business literature discusses head office–subsidiary relations and the localization of
strategy to meet local demands and resource availability.9 Firms often internationalize by pursuing either
3. In what ways has SABMiller innovated in response to the context?
To help students respond to this question, the instructor can suggest students begin by listing the
classifications and definitions of the various types of innovation illustrated in the case. The students
should then be able to describe why these innovations were appropriate and necessary.
Theoretical Perspective: Disruptive versus Sustaining Innovation
Scholars agree that entering the low-income segment and being successful in that market not only
requires differences in and disruption to the traditional business model, system and approach15 but
additionally requires a shift in how corporations think and do business.16 Sustaining technologies are
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whose low price point makes it accessible to lower-income consumers in developing markets such as
Mozambique.
Large firms that are industry leaders, often described as incumbents, fall into a pattern of continuous
improvement of their mainstream products or services, known as sustaining innovations. These industry
leaders find it extremely challenging to break free from the habitual sustaining culture of innovation to
Theoretical Perspective: Frugal Innovation
Sehgal, Dehoff and Panneer23 describe frugal engineering as an overarching philosophy enabling a “clean
sheet” approach to product development. This type of innovation has arisen as firms attempt to design and
develop products and services for the four billion consumers, often referred to as the “base of the
4. Good business models create virtuous cycles where strategic choices reinforce each other in
contributing to the overarching goal. Map out the key strategic choices made and indicate
whether they reinforce each other and, if so, how.
Teaching Perspective
Theme A’s final question allows for the student to bring together all the elements of SABMiller’s strategy
loops.
Theoretical Perspective
When entering low-income markets, firms need to grapple with a new set of parameters in terms of the
end customers, low margins, distribution channels, how technology is developed, partners in the value
network and the development dimension of serving people living in poverty. Further complicating the
area where the literature is notoriously fractured within silos.29 Sanchez and Ricart30 identify the four
elements common to most definitions of the business model: the strategic choices the firm makes, value
creation, value capture and the value networks engaged.
Zott, Amit and Massa, describe a business model as follows:31
In one of the only studies to empirically investigate business model and value creation for low-income
markets, Sanchez and Ricart identify what they term “isolated” business models and “interactive”
business models:32
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By developing such capabilities as scalability, flexibility, knowledge sharing, local sourcing, fragmented
5. List the key stakeholders involved in Impala beer. Describe what success means to each of
these stakeholders in terms of the Impala beer business.
Exhibit TN-5 shows the dramatic growth in the volume of Impala beer sold. Should the volume continue
to rise at this pace, SABMiller will need to address the consequences for the stakeholders in this model.
Teaching Perspective
The instructor can begin by asking students to list the stakeholders involved in the Impala model. This
exercise encourages students to start thinking about the problem from a multi-dimensional perspective,
which, in turn, encourages them to think about the impact beyond the firm. By using DADTCO’s
After the students have identified the key stakeholders, the instructor can ask, “What is the importance of
each of the stakeholders?” The instructor can further prompt students by asking, “Should companies
develop the economies into which beer or other products will be sold? And should they develop
smallholder farmers or other producers?” These questions should elicit a lively debate (see Exhibit TN-6).
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In Mozambique, formal markets and institutions have a young and fluid development. We learn this from
the background information on the country presented in the case and from the discussion of Question 1.
The description of the theory below should assist in guiding students, both in debating the relevance and
importance of the multi-stakeholder engagement described in the case and in understanding how each
player fulfills an important role in the overarching business model.
According to London and Hart,45 companies need a strong social orientation with non-traditional partners,
including non-governmental and civil society organizations, private companies, governments and
financial institutions.46 Such partnerships provide a sustainable competitive advantage for the company
and its partners.47 Again, we see evidence of engagement with a wide array of partners, including civil
society organizations such as Cassava+.
6. Is SABMiller contributing to the Mozambican economy? Should it be concerned about the role
it plays?
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This question will be partly addressed in the previous section but warrants an explanation of its own
because it takes the student from the debate about stakeholders and the role of SABMiller and its
subsidiary, CDM, from the Mozambican context into the broader realm of businesses’ role in developing
markets. The instructor can use this question to lead the class into the ideological debate underlying this
case, which concerns the role of business in society.
The instructor can also introduce a discussion on the evolution of business strategy in developing
markets. Initially, the focus of business strategy was on creating profits for businesses, otherwise known
as first-generation strategies.52 For the most part, these strategies failed as firms struggled to create
appropriate products and services for the low-income consumer. In part, the need for a deeper
engagement within these markets stemmed from the need to do better business by focusing on consumer
Theoretical Perspective
The publication of Prahalad and Hart’s54 paper in the Harvard Business Review, describing the “fortune at
the bottom of the pyramid,” opened the debate on exploitation and development in developing markets,
home to four billion people living on low incomes. As firms saturated their traditional markets and
customer bases, evidenced by declining growth and fast commoditization,55 many firms began shifting
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Also in 2011, we see two of the most globally respected scholars in the strategy domain publish an article
on the importance of “shared value” in firm strategy.62 Porter and Kramer describe the following:
In a global economy, sustained competitive advantage arises from tackling social, political and
environmental issues as part of a corporate strategy — not just pursuing business as usual. Why
else would companies ignore the well-being of their customers, the depletion of natural resources
vital to their businesses, the viability of suppliers, and the economic distress of the communities
in which they produce and sell?