Meshack Mabogoane reports on the National Sorghum=20 Breweries’ deal with United Breweries
National Sorghum Breweries’ (NSB) announcement this week=20 that India’s United Breweries (UB) would have a say in=20 the appointment of senior management marks a turning=20 point in its five-year history .
The UB deal, sealed this week, is the first and most=20 substantive partnership NSB has entered into, and raises=20 questions about NSB as an example of black economic=20
The agreement, signed by the chairmen of NSB and UB,=20 Professor Mohale Mahanyele and Vijay Mallya, provides=20 for a R70-million injection worth 30 percent of NSB’s=20 shareholding. UB can increase its equity to 50 percent,=20 subject to approval by the Reserve Bank and both=20 companies’ shareholders.
UB will also train NSB’s management, and may appoint the=20 managing director and heads of the marketing and sales=20 departments, areas considered to be NSB’s “weak” points.=20
For the next 18 months, however, Mahanyele will remain=20 as executive chairman with UB’s Mallya becoming=20 executive vice chairman.=20
The position of Mahanyele as both executive chairman and=20 chief executive has long been contentious.=20
Negotiations between NSB and two South African=20 companies, Foodcorp and Msele, a black company,=20 floundered on the insistence by these two companies that=20 the positions be separated and Mahanyele be replaced as=20 chief executive.
NSB is now in a better position to take on South African=20 Breweries (SAB), in the clear beer market. SAB has a=20 virtual monopoly in clear beer and is poised to increase=20 its share of sorghum beer from its present 30 percent.
UB has an internationally recognised clear beer –=20 Kingfisher; but it is hard to see how UB will help NSB=20 fight off competition in sorghum beer, still the=20 company’s mainstay.
On the well-publicised problems of pilfering and=20 mismanagement at NSB, aggravated by the death of a top=20 executive who tried to deal with these issues which seem=20 to be endemic and deeprooted, Mahanyele accepted that=20 these problems have marred the image of NSB. He said=20 investigations were under way and promised vigilance.
Mahanyele also mentioned the sensitivity of an apparent=20 or real control by non-blacks of a company that=20 represents black empowerment.
UB has effective control of top executive positions=20 while owning only a third of equity. And it could=20 increase its stake and its control.=20
It could be argued that real empowerment should entail=20 dominance in management and majority shareholding by=20 blacks, a position that NSB started from and for which=20 it was lauded.