Companies

Local raw material sourcing spares EABL from Russia shocks

karuku

Jane Karuku, EABL Group Managing Director. PHOTO | FILE | NMG

The strategic shift to local sourcing of raw materials has spared East African Breweries Plc (EABL) #ticker:EABL from supply chain disruptions following Russia’s invasion of Ukraine.

The geopolitical event has led to soaring commodity prices including those of wheat and barley which are key brewing ingredients for the alcoholic beverages produced by EABL.

“A few years ago we declared an intent to have 80 percent of all our input sourced locally and that kind of shields us from the heavy shocks from global impacts such as what is going on in Ukraine,” said EABL chief executive Jane Karuku.

Russia and Ukraine, for instance, account for about 30 percent of the world’s barley supply and the conflict has caused a major disruption in supply of the commodity.

Ukraine recently banned the export of barley, among other commodities as it hunkers down in the face of the conflict.

Imports from Russia on the other hand have been made difficult because of sanctions imposed by other world powers on Moscow including its ban from SWIFT which is the platform most commonly used by banks to verify international financial transactions.

Logistics firms have also boycotted Russia to protest the Ukraine invasion, further adding to the difficulty of doing business with Moscow.

Shipping lines Maersk, MSC and CMA CGM recently suspended most deliveries to and from Russia.

EABL has been developing its regional network of farmers to secure raw materials for its various products including beer.

More than 60,000 farmers from the East African region supply the brewer with barley and sorghum. In Kenya, it has contracted 47,000 barley and sorghum farmers.

In the year ended June, the brewer purchased approximately 45,000 tonnes of barley and 32,000 tonnes of sorghum from farmers in the East Africa region.

The company’s Senator Keg, produced at its Kisumu plant, is among the products made from sorghum sourced from western Kenya.

[email protected]