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15
Source agricultural
raw materials locally in Africa
138
Sourcing sustainably
Looking ahead:
Our 2020
commitment:
Our 2020
result:
45%
Public Private Partnerships (PPPs)
Local sourcing developments
Heineken N.V.
Annual Report 2020
Introduction
Report of the
Executive Board
Report of the
Supervisory Board
Financial
Statements
Sustainability Other
Review Information
Deliver 60%
of agricultural
raw materials in
Africa via local
sourcing within
the continent
Not achieved
Our contribution
to the SDGs:
2.3
Productivity
and incomes of
small scale farmers
Meeting our target of 60% local sourcing has
proven challenging and we have more work to
do to achieve it.
Local sourcing brings benefits to farming
communities, national governments and
HEINEKEN. Substituting imports also
reduces the demand for Foreign Exchange
(Forex), which is a growing challenge in
several markets.
Local sourcing is complex and can be
impacted by uncertainties such as natural
agricultural volatility and challenges for
farmers in accessing finance and quality
inputs. The lead-times to attract and
implement investments in local processing
capacity have also been longer than expected.
We have broadened the scope of our
commitment to include South Africa and
Ivory Coast in 2017 and Mozambique in
2019. To drive progress, our local sourcing
programme is fully embedded in core business
operations and has a clear global to local
governance structure.
Despite the impacts of COVID-19, our local
sourcing continues to expand. We sourced
raw materials from 35 value chains across 12
operating companies in 2020. An estimated
45% of agricultural raw materials were
sourced locally in Africa, up from 44% in 2019.
This increase was mainly driven by growth in
domestic barley production in Ethiopia and
increased availability of sugar from Zambia
and South Africa.
One of the most challenging areas is sourcing
local malted barley. Currently, only 11% of our
malted barley is sourced in Africa, compared
with 71% of other raw materials. This situation
will improve in 2021 with the opening of two
new malting plants in Ethiopia.
Raw materials sourced in Africa
2020
2019
2018
2017
2016
2020 target
44%
37%
42%
49%
Since 2008, eight PPP projects have helped
to develop strong and sustainable local
value chains.
Through these projects, we have learnt valuable
lessons. One of these is that it can take several
years for a local value chain to become strong
enough to stand on it's own feet.
For this reason, our in-house local sourcing
teams continue to work with local partners
beyond the lifetime of PPP projects to further
develop local value chains, from farm
to brewery.
Supporting small-scale
sorghum farming in Burundi
Our operating company, Brarudi, started
working with farmers to develop the
sorghum value chain in Burundi in 2009.
It now supports 48 farmer cooperatives
with digital tools, training and access to
improved seeds, fertiliser and financing.
Brarudi has expanded its in-house
agricultural team and is partnering with
local research institutes to develop and
distribute sorghum varieties that deliver
improved yield and quality. It is investing
in collection and storage infrastructure to
improve market access and now has two
brands - Nyongera and Viva Malt - that are
made from 100% local raw materials.
Building on the success of the CREATE barley
programme in Ethiopia, Heineken, Malteries
Soufflet and the International Finance
Corporation (IFC) have launched the BOOST
project to further expand barley development
from 2020-22.
New variety trials are ongoing in 11 operating
companies, including a partnership with
research institute ICRISAT in Nigeria where
we are testing sorghum varieties in five agro-
ecologies to improve productivity.
The African Studies Centre at Leiden
University published a study into the sorghum
value chain in Nigeria in October. This will be
followed-up with further research into the
emergence of larger scale commercial farming
in 2021.
We have continued to build local agricultural
development capability, with teams focussed
on local sourcing in 10 of our African
operating companies.
Learn more about this topic on our website
We remain committed to local sourcing
in Africa and will continue to work with
partners to develop strong and sustainable
local raw material value chains.
