The Business of Brewing Beer in Eastern Congo

Via Foreign Policy, an interesting article on the business of beer in the Democratic Republic of Congo:

It’s a June night in Kinshasa, and rapper JB Mpiana’s weekly VIP bash is just starting to heat up. Toned groupies splash like mermaids in a sunken pool. Middle-aged businessmen perch on the ledge above to watch. A minute before midnight, JB runs onstage among a huge posse of gyrating dancers in sunglasses. He rips into some of his biggest hits; a bombastic performer, he glides across the stage with a beefy grace, dressed in a hunter-orange jumpsuit and matching cap.

Most songs deal with the usual material, girls and gangbangers, in the Democratic Republic of the Congo’s Lingala language. But when JB starts to chant the lyrics of his biggest hit of the night, the real purpose of this party — festooned with yellow-and-blue banners advertising Primus, the beer that everyone would be drinking anyway, even at this lush downtown wine bar — becomes obvious.

“I love my Priiimus!” JB yells. The crowd yells back: “I love my beer!”

After the show, as his black Cadillac Escalade purred nearby, backup dancers waiting impatiently in the back seat, we asked JB about his lucrative contract with Bralima, the Heineken subsidiary that brews and distributes Primus. In return for writing numerous odes to Primus and featuring its trademark yellow-and-blue trucks in his videos, JB gets invaluable national exposure — and some $300,000 a year.

The dream contract for any celebrity in the Democratic Republic of the Congo (DRC) is with Bralima — better than any Kinshasa-based record company, it can guarantee its stars secure, stable careers and fame, even in places where a different rebel group takes over the radio station practically each month. Bralima even played peacemaker for JB’s Biggie vs. Tupac-style beef with a local rival, convincing them to share the stage for Bralima’s 90th-anniversary party. “There’s so many advantages to being with Bralima,” JB said. “They have reach all over the country.”

Of course, in the DRC, “all over the country” includes some of the most dangerous places on Earth. The authority of the national government in Kinshasa does not extend to all of eastern Congo, which is largely run by a rogues’ gallery of rebel groups, including the notorious M23, whose list of alleged crimes against humanity includes looting, murder, and rape. Congo’s civil wars have been fueled by everything from blood diamonds to conflict coltan extracted from the country’s abundant mines, which makes operating any sort of business in the east a morally dubious proposition. But that has not stopped Heineken and many other foreign firms, which see themselves as the country’s best hope for postwar reconstruction.

Corporations from the East India Company to United Fruit did shady business in conflict zones for decades, inviting the wrath of diplomats and international watchdogs who accused them of war-profiteering. By the end of the 20th century, however, the rapidly growing international peace-building community — including NGOs, the United Nations, development consortiums, think tanks, and some developed-world governments — started taking a different tack. These days, an emphasis on economic opening and corporate social responsibility means that many of the world’s most powerful organizations are actively encouraging corporations into conflict markets, hoping this will lead to peace. Sometimes, though, when Bralima’s yellow-and-blue trucks hit those dusty Congo roads, the results can be messy.

IN 1923, A GROUP of European investors founded one of Africa’s first breweries, naming it Brasserie de Léopoldville after Belgian Congo’s colonial-era capital. Primus, its inaugural brew, did not fare particularly well, with drinkers preferring better-tasting and cheaper Dutch and German beers until the 1950s, when the company — in which the Netherlands-based Heineken purchased a minority stake in the 1930s — began expanding production. Over time, Primus became Bralima’s marquee beer and a source of national pride: a workhorse pilsner with a taste satisfaction directly proportional to the bottle’s coldness and the degree of grime built up inside your sinuses from a day of breathing Congo’s diesel-fume-laden air.

Following Congo’s independence from Belgium in 1960, Primus played a central role in the new country, even basing its logo on the national flag. Bralima — as the company was now called, for Brasseries, Limonaderies et Malteries Africaines — brewed a whopping 145 million gallons of beer in 1974, the year Muhammad Ali and George Foreman duked it out in the “Rumble in the Jungle.” When dictator Mobutu Sese Seko banned imported beer for a time in the 1970s, he kept the Primus flowing, making it a core policy to maintain local production while other services and infrastructure crumbled and the state went bankrupt. Beer, he believed, was the magic ticket to keeping his citizens happy: If it ever ran out, his days would be numbered.

Ultimately, it wasn’t beer that toppled Mobutu, but a 1997 uprising supported by neighbors Burundi, Rwanda, and Uganda. The country was given a new name, the Democratic Republic of the Congo, but its struggles continued. The current government, under President Joseph Kabila, has faced monumental challenges, from entrenched corruption and nonexistent infrastructure to raging conflict both within and around the country. Bigger than the U.S. Midwest, the DRC holds some 70 million people. But, by some estimates, nearly 10 percent of its population has died as a result of a series of fratricidal civil wars that began in 1996. Last year’s mutiny by the M23 rebel group in the eastern city of Goma, as well as the ongoing violence since then, has displaced hundreds of thousands and killed hundreds. Rebel offshoots are now stockpiling weapons for a potential showdown with the world’s largest U.N. peacekeeping force, which has been in the country since 1999 but has just been given an unprecedented mandate to take offensive action against the rebels.

Heineken, which bought out Bralima in 1982, has maintained its investment in the DRC throughout the turmoil, anticipating major shifts in the global spirits trade, as giant conglomerates like Belgium’s Anheuser-Busch InBev and London’s SABMiller have moved away from reliance on stagnant European and American markets to snap up foreign brands. Heineken doesn’t report profits by country, but Africa and the Middle East accounted for $873 million in profits and 14.4 percent of the company’s revenue in 2012. Frontier beers like Bralima are emerging-country lottery tickets, chances to buy into a market before the country booms and drinkers develop new, more exotic brand loyalties. China, the big success story, saw a 1,000 percent explosion in beer sales in the 1990s that led to local brands like Tsingtao and Kingway Brewery being acquired by foreign companies and later encouraged odd imports like the luxury Chinese version of Pabst Blue Ribbon that sells for $44 a bottle. Since taking over Bralima, Heineken has acquired major stakes in other national classics like Egypt’s Stella, India’s Kingfisher, and Mexico’s Sol.

Under guidance from Amsterdam, Bralima’s market share in the DRC has rocketed from 30 percent in 1987 to 60 percent today — with Primus as the flagship brand. Bralima’s main plant in Kinshasa, one of its six in the country, churns out up to a quarter-million of the football-sized brown, dimpled bottles every day, alongside Heineken, Coca-Cola, Sprite, and Fanta. (Bralima is also the country’s biggest soda distributor.) In addition to its contracts with celebrities, the brewery has exclusive deals with many bars in Kinshasa, which are festooned with Primus-branded tables, chairs, and ashtrays. Hand-painted signs for Primus seem to paper every surface in the DRC, many with the slogan “Toujours Leader!” (“Always the Leader!”).

GIVEN THE VOLATILITY of the country’s politics, remaining the leader in Congo can call for some tricky maneuvers. But you wouldn’t immediately know that from visiting Bralima’s Kinshasa plant, where tall Dutch managers in crisply collared shirts oversee operations from the bird’s-eye-view walkways and negotiate employee contracts at the plant’s on-site watering hole. Inside the main brewing complex, Congolese technicians wearing lab coats inject hops into a row of massive copper vats. At the loading dock out back, the stacks of empty crates reach 20 feet high as an endless procession of trucks waits for refills.

Sylvain Malanda, Bralima’s Congolese communications manager, was in his quiet office in the building next door when we visited in June. Under a hand-painted mural depicting some of Bralima’s charitable activities (grain handouts, people lined up at a free clinic) and the legend “Bralima: Sower of Growth,” Malanda seemed surprised when asked about corruption in the DRC: “We can do some favors and give gifts [to] politicians if they get in trouble or ask us. But no corruption.” Malanda says the help is mutual: “The government is helping us a lot. Congo is open for business!”

In the east, however, with its virtually nonexistent government presence and horrifically bad transportation infrastructure, it is the rebels who determine what stays open. Anyone driving through eastern Congo quickly becomes familiar with the experience of getting stopped at checkpoints and being asked to pay fees. The checkpoints are low-tech affairs, often little more than a wooden log or slack rope thrown across a muddy red jeep trail, perhaps with a shack nearby sheltering a couple of guys holding Kalashnikovs. Still, even a single checkpoint can bring in more than $700,000 per year and probably much more, according to a 2008 report by the U.N. Group of Experts on the Democratic Republic of the Congo.

The checkpoints are the primary revenue source for armed groups in the area and bring in more than enough to fund an insurgency in a country where the average wage is about a dollar a day and used AK-47s can run for as little as $50. And with automatic weapons as prevalent as they are, almost anyone can be a checkpoint “rebel” in the eastern DRC, including less-than-scrupulous police and armed forces trying to supplement their anemic wages.

M23 is one of the major players in the blockade racket. Formed by those unsatisfied with a 2009 peace deal that had only nominally integrated the Rwandan-backed rebels into the Congolese army, the group, which is estimated to have up to 6,000 members, wants greater autonomy in parts of North Kivu province. The United Nations sanctioned M23 late last year, accusing it of murdering, raping, and looting across swaths of eastern Congo in an attempt to intimidate its way to power. Longtime Rwandan-Congolese rebel general Bosco Ntaganda, currently at the International Criminal Court on charges of war crimes, rape, and use of child soldiers, is one of the founders.

Eastern Congo’s levy bosses aren’t exactly hiding from international retribution. In a surprisingly easy-to-arrange conversation, we spoke by cell phone in July with a taciturn Rwandan calling himself Mr. Damien, “tax collector” for M23. Damien said that he splits his time between M23’s three primary checkpoints, overseeing operations at the Bunagana, Kibati, and Kiwanja stations. As matter-of-factly as if discussing tolls on the New Jersey Turnpike, Damien explained that he charges $38 for a van to pass, $300 for a medium-sized goods truck, and $700 for a fuel tanker, handing out official-looking receipts for payment. The three main checkpoints bring in most of the group’s funding, enough money to purchase weapons, pay salaries and bribes, and even occasionally dole out social aid to eastern Congo’s poor.

Everyone gets stopped, even the Bralima trucks painted like big yellow-and-blue DRC flags. Damien explained that M23 takes $500 from the trucks hauling crates of Primus into rebel-controlled areas: “NGOs pay. People carrying charcoal pay. Women going to the market pay. Everyone pays! We don’t do preferential treatments. So, of course, those who transport beer also pay.” Drivers leaving for rebel areas are given extra cash to cover the payments, a security officer at one of Bralima’s main distribution depots in eastern Congo told us. By the time the brown glass bottles reach their remote village destinations, prices can rise to four times the $1 they cost in Kinshasa.

We took Damien’s numbers and multiplied them by the thousands of trips per year that Bralima runs through eastern Congo’s rebel-held regions. Extrapolating from Bralima’s DRC market share and per capita rates of beer consumption elsewhere in rural Africa, we estimate that approximately 16 million bottles of Bralima beer, or about 2,000 transport vehicles’ worth, must pass through checkpoints each year. Assuming, based on our low-end estimates, that these trucks are fortunate enough to be stopped only once per journey at the dozens of blockades along the region’s few transport links, manned not only by M23 but also other road and river rebel sentries, Bralima distributors could be paying upward of $1 million a year to rebel groups.

When we presented Heineken with our figure this summer, John-Paul Schuirink, financial communications manager, said that due to the complexity of the situation in the DRC and the use of local distributors, the amount and the payments were difficult for Heineken to verify. But Schuirink said that in response to Foreign Policy’s inquiry, the company was in the process of investigating and, as a precaution, had “immediately suspended all payment of third party distributor invoices in the area.” Schuirink also noted in an email that “this area represents far less than 1% of our total volume in the DRC and that the vast majority of our deliveries in the area are outside of the territories that are under the influence of M23.”

Bralima outsources its distribution to local independent operators, a common way for corporations working in militia- or cartel-controlled zones to keep space between themselves and the road. Heineken has denied that it uses local distributors to immunize the company, pointing out that it operated this way for decades before the rebels occupied the area. But the structure has certainly allowed Bralima to keep running in the east as warlords have come and gone.

Bralima had breweries in cities under control of the rebel group RCD-Goma during its occupation of eastern Congo between 1998 and 2003, explained Jason Stearns, who in 2008 headed the U.N. Expert Group on Congo, conducting a special investigation into violence in the country’s east. “So the choice they would have had at that point — and that any local businessman had at that point — was to disengage and to leave and stop business, or to continue,” Stearns said. Bralima’s decision, along with those of other companies that continued to operate in the region, was extensively documented in the “Lutundula Report,” the Congolese parliament’s 2005 assessment of conflict profiteering. Although the widespread payments to rebels are common knowledge, the Congolese government hasn’t followed up the Lutundula Report with further investigations, and business has proceeded as usual ever since. “It’s not just Bralima that continued, but it’s every single Congolese company in the country,” Stearns said.

Given beer’s almost mythical status in Congo, shutting down Bralima in the east, though it could dry up some funds going to M23, would do little beyond driving up prices and encouraging smuggling. (Last year, a logistical problem disrupted the flow of beer in Goma for just under two weeks, leading to a 50-cent increase per bottle, according to members of Bralima’s distribution staff, who said that thousands of Congolese took to the streets to riot throughout the city. As locals say: “You can bomb a hospital, but not Bralima!”) Beer trafficking would potentially provide an even more lucrative source of income for rebel groups than the blockades do today. Imagine Prohibition-era Chicago, transposed onto one of the planet’s least stable regions.

The international community has placed some checks on companies that do business, either directly or indirectly, with the rebels. U.S. Executive Order 13413, a 2006 directive, penalizes any American corporation or its subsidiary found “to have materially assisted, sponsored, or provided financial, material, or technological support” to any anti-government militants operating in the DRC. U.N. Security Council Resolution 1493, adopted in 2003, also sanctions assistance to rebel groups in the region. But the sanctions are extremely difficult to enforce, especially given that most companies in eastern Congo work with local partners. Stearns, whose experts group had a role in monitoring violations of U.N. sanctions, said, “We were able to prove that individuals and small local companies were liable, but while companies above them in the supply chain were morally negligent, it is often far more difficult to prove legal liability.” Despite all best efforts, in a place like eastern Congo, once a corporation goes in, it can become difficult for anyone — whether local governments, international observers, or far-flung corporate executives — to control exactly what goes on there.

ACCORDING TO MALANDA, Bralima’s communications manager, his bosses back in Amsterdam don’t care much about how he makes money — so long as it gets made. “For Heineken, what matters is our sales goals. If we make them, all is good. If not, big trouble!” Malanda said, laughing as he pretended to beat us with an imaginary stick. (Schuirink told us, “We do not recognize, nor condone these statements.”)

At Heineken’s headquarters in central Amsterdam, a vaulted house perched across the canal from the firm’s original brick brewery, global communications director John Clarke put the company’s philosophy in quite different terms. “There’s a view, a belief that you can help the most by being there, being present … being a contributor to the local economy,” he told us.

Heineken’s approach in the DRC follows a business concept known as corporate social responsibility (CSR). Part social investment, part public relations campaign, and part community integration effort, CSR assumes that if big companies can align their self-interest with the interests of the countries in which they’re investing, everyone benefits. Early versions, such as the charitable works of United Fruit, may have appeared to be little more than smoke screens for bad practices overseas. In 1970, Milton Friedman called mixing social welfare and profit little more than “hypocritical window-dressing,” “a suicidal impulse” for businesses. But CSR is now a multibillion-dollar industry in its own right and an essential component of many major corporations, complete with beautifully designed websites and thick, glossy annual reports.

The Heineken Africa Foundation, for example, spent more than half a million dollars last year supporting programs for prenatal care, sickle cell anemia clinics, blood banks, and primary schools. Heineken’s 304-page CSR report lists dozens of positive projects, ranging from its comprehensive AIDS program to the local sourcing of rice used at its production facilities. Bralima’s foundation recently spent $90,000 building an orphanage. Almost all other international food and drink conglomerates operating in fragile countries, from Kraft and Mars to Pepsi and Nestlé, undertake similar outreach. “I have always believed that business could be a force for good,” CEO Irene Rosenfeld said upon the release of Kraft’s 2010 CSR report.

The most recent thinking about CSR holds that the mere presence of a major corporation in an unstable region is beneficial. A century of scholarship on the complicated ties between poverty and violence has argued that greater economic integration can help bring peace to chaotic parts of the world. According to the World Bank, this sort of corporate opening is “crucial for countries coping with and emerging from violence” and can lead to a more utopian future for local residents. Having Bralima in eastern Congo, so the theory goes, is a CSR activity in itself. It means better economic opportunities, better clinics, better educational prospects — and in the long term, a less violent society as economic growth decreases the motivation to fight.

In reality, having Heineken in eastern Congo may boost GDP, but its payments to rebels fuel a conflict that leads the country in the wrong direction. Will Reno, of Northwestern University’s Program of African Studies, succinctly described the dilemma: “Will you favor CSR and economic opening, or consider the payments a violation of legal statute? You have to pick. It can’t be both.” Heineken’s troubles in eastern Congo, where just the cost of driving through the region poses ethical and legal questions, point out exactly what makes even the most socially responsible economic opening so fraught in vulnerable countries. Who will enforce international law if, as seems plausible, Coca-Cola’s reopening of its plant in Mogadishu requires taxes paid on al-Shabab-controlled roads, if FARC offshoots in Colombia collecting money from SABMiller’s Bavarian-beer distributors buy more guns with the funds, or if Boko Haram shakes down trucks laden with Nestlé and Unilever products in Nigeria? Companies expanding into post-conflict Afghanistan will almost undoubtedly find militia checkpoints awaiting them. It is hard to imagine that these companies will not in some way be implicated in the conflicts they are supposed to help end.

IN KINSHASA, some 800 miles away from the lawless eastern DRC, the difficulties — and the benefits — of bringing Primus to the people seem distant. Stealing away to his afterparty, JB was clear on the upside of trusting corporations in Congo: “I have faith in [Bralima], and they have faith in me. We have faith in each other.” Sidestepping dozens of fans, JB jumped into the idling Escalade and rode off into the night, with his trademark motto, pelisa ngwasuma — “light the fire” — echoing through unpaved slum roads. Eastern DRC seems far from reaping the rewards of economic growth, or seeing peace. In fact, the latest peace deal has only created a bigger power vacuum, encouraging spinoff rebel franchises, like Raia Mutomboki, to follow M23’s financial model, counting on the fact that delivery trucks will keep lumbering through the Goma mud on their way to new opportunities.

Back in Amsterdam, Heineken has greater ambitions than to be the DRC’s liquid savior. There are always new markets to win. As the United States has eased sanctions on Myanmar over the past year, multinationals of all shapes and sizes have sprinted in to engage in heavy-duty economic expansion. Heineken, already in 178 countries, knocked out a $50 million joint venture with locally owned Alliance Brewery just this past May. Clarke, the Heineken spokesman, has high hopes for the company’s global future. “Think Star Trek!” he told us. “There shouldn’t be any frontiers for the enjoyment of a nice cold Heineken that’s enjoyed responsibly.”

This entry was posted on Wednesday, September 4th, 2013 at 7:45 am and is filed under Democratic Republic of Congo.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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