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Viewing cable 06KINSHASA1770, BREWERY FLOURISHES IN DRC'S DIFFCULT CLIMATE

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Reference ID Created Released Classification Origin
06KINSHASA1770 2006-11-20 16:42 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Kinshasa
VZCZCXRO4148
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #1770/01 3241642
ZNR UUUUU ZZH
R 201642Z NOV 06
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 5194
INFO RUEHXR/RWANDA COLLECTIVE
RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEAIIA/CIA WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMFISS/HQ USEUCOM VAIHINGEN GE
UNCLAS SECTION 01 OF 02 KINSHASA 001770 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD EINV ELTN EWWT ECON CG
SUBJECT: BREWERY FLOURISHES IN DRC'S DIFFCULT CLIMATE 
 
REF: KINSHASA 1608 
 
1. (U) Summary. One of the DRC's oldest businesses, Bralima 
brewery, demonstrates a possible way forward for Congo's 
beleaguered manufacturing sector.  Bralima produces and 
distributes Coca-Cola and Heineken brands throughout the DRC. 
Even in an uncertain economic and political climate, 
Bralima's sales are increasing and its operations expanding, 
supported by an extensive distribution network.  Other 
businesses in the DRC may benefit from some of Bralima's 
lessons, although Bralima's long roots and relatively strong 
base of demand for its products may make its success 
difficult to duplicate. End Summary. 
 
Operating and Expanding in Adverse Business Environment 
--------------------------------------------- ---------- 
 
2. (SBU) EconOff and Econ TDYer met with the Bralima and 
Coca-Cola managers in Kinshasa in late September, and EmbOffs 
toured Bralima's Kinshasa facility in October. Bralima, one 
of the DRC's longest continuously-functioning businesses 
(opened in 1923), is now a subsidiary of the Dutch company 
Heineken.  Bralima's DRC headquarters are at its 
well-maintained several-acre plant in Kinshasa, and its 
products include both globally-known and domestic market 
alcoholic and non-alcoholic beverages, such as Congo's Primus 
beer. Coca-Cola contracts with Bralima to bottle and 
distribute its products throughout the DRC, and its offices 
are co-located within Bralima. Bralima's five main bottling 
plants are in Kinshasa; Boma, Bas-Congo; Bukavu, South Kivu; 
Lubumbashi, Katanga; and Kisangani, Orientale province.  The 
Kinshasa and Boma plants are responsible for 75 percent of 
production. 
 
3. (SBU) Despite some notable macroeconomic difficulties in 
the DRC (reftel), the Coca-Cola and Heineken directors 
reported 2006 has yielded their highest production volumes in 
30 years, buoyed by overall strong national economic growth 
since 2001.  Sales are up 40 percent over 2005, with a 17 
percent increase in Kinshasa and even higher growth in 
eastern Congo.  Kinshasa represents two-thirds of sales by 
volume. Total sales are 60 percent beer products and 40 
percent soft drink products. (Note:  Coca-Cola's studies 
indicate that nationwide, Congolese consume an average of 
five to six soft drinks per year, but consume 28 per year in 
Kinshasa.  An average civil servant must earn two and a half 
hours worth of government wages to buy a Coca-Cola. End 
note.)  As a result of the growing and currently unmet 
demand, the company is installing a new bottling line at the 
Kinshasa plant - an estimated USD 10 million investment. 
Bralima's competitor, BraCongo, has recently announced in 
local newspapers that it too is planning new brewery 
investments in 2007. 
 
4. (SBU) Coca-Cola and Heineken managers attribute several 
factors to Bralima's success in the face of difficult 
political and economic conditions: a strong community 
presence, corporate self-reliance, hedges against insecurity, 
flexibility and innovation in distribution and a strong 
stance against corruption. The brewery maintains its 
community presence via local employment and advertising. In 
Kinshasa alone, Bralima has 600 to 800 direct employees and 
hundreds of others who are indirectly dependent on its 
bottling operations.  Its company and product logos seem 
omnipresent, via billboards, highly-visible signs at bars and 
restaurants, and even on its own printed fabric. The beverage 
managers say this community entrenchment protected them from 
the catastrophic looting in 1991 and 1993 and would help 
insulate them against any future unrest.  Companies looking 
to enter Congo now do not have this extensive support and 
would not therefore be protected from unrest, they said. 
 
5. (SBU) The brewery also attempts to hedge against political 
and economic insecurity and to be completely self-reliant. 
Almost all of the brewery's inputs, including water, imported 
and domestic rice, bottles, and ice are produced 
domestically, and the plants rely on their own generators for 
their power supply.  The brewery hedges itself in part 
against inflation by buying "futures" of the concentrate, 
securing the price in advance on later shipments. 
 
6. (SBU) The Bralima manager also said his company takes a 
strong stance against corruption, but he and the Coca-Cola 
manager cautioned that a company must be large and 
influential enough to be able to take drastic measures and 
coordinate closely with other local businesses to fight 
corruption. The Bralima manager said, for example, that 
Bralima closed its brewery in Bukavu for two weeks to protest 
 
KINSHASA 00001770  002 OF 002 
 
 
what it believed to be a corruptly obtained judgment against 
it.  (Note: Other EconOff contacts said that the court in 
Bukavu closed the factory. End note.)  The judge was 
reportedly replaced soon after the closure. 
 
Distribution is the Key 
----------------------- 
 
7. (SBU) It is through its distribution network, however, 
that Bralima demonstrates the innovation and flexibility 
necessary for companies operating in business environments 
like the DRC's.  Nationwide, Bralima has 28,000 sales 
outlets.  In urban areas, trucks and hand carts are the 
primary distribution modes.  In Kinshasa, the brewery uses 
both its own trucks and those of contractors for delivery, 
and Bralima's manager says the company has compiled a 
database of information on all its sales points.  The 
brewery's trucks are equipped with GPS to let brewery 
managers know their exact location and routing and to send 
messages if the drivers go off-route.  The managers said 
Kinshasa distributorships, half of which are female-run, 
range in size from single pushcarts to a female-owned 
business with USD 10 million annual revenue.  Bralima pays 
its largest distributors through a cellular banking service, 
CelPay, but the limited banking infrastructure currently 
limits expanding the use of this method. 
 
8. (SBU) Rural distribution obviously presents greater 
challenges, and in some places is a loss-leader maintained 
only to promote brand recognition.  Most distribution to its 
many sale points throughout the country is accomplished via 
the Congo's extensive river networks. Some rail and road 
transport is possible, although theft and assault makes these 
methods more risky, and dependence on government-operated 
rail transport makes the company subject to strikes and other 
factors. 
 
Comment 
------- 
 
9. (SBU) Bralima,s evident success shows that conducting 
business is possible despite the fact that the DRC is one of 
the most difficult business environments in the world. 
However, its story also demonstrates that companies may need 
deep roots and long years of on-the-ground experience to 
achieve this success.  Further, others should be wary not to 
take too many lessons from this particular story, as the 
beverage industry seems to stand nearly alone in many 
post-conflict African countries as a successful manufacturing 
sub-sector. End comment. 
MEECE