The world’s largest brewer, Belgium’s Anheuser-Busch InBev, is working with blockchain startup BanQu to trace products in its supply chain. Carlos Britto, CEO of AB InBev, briefly discussed the project at the ongoing annual meeting of the World Economic Forum.
Britto talked about the work of AB InBev in Africa, where it has implemented a blockchain solution to connect with the community that produces the raw materials for its beverages. The goal was to create a circular economy that improves the standard of living of the people.
Illegal and poorly processed alcohol leads to several deaths in Africa. A 2010 report by Oxfam says the UN’s World Health Organisation found that half of all alcohol drunk in Africa is illegal. Branded products are more expensive than illegal alcohol, and thus not very popular in Africa due to the low per capita income.
AB InBev found that 95% of its produce is consumed locally, and thus decided to tweak the recipes and source local products such as maize and cassava for brewing and sell the final product to the community. Britto said the company approached governments to give them tax concessions to develop this business model, which will combat the illegal alcohol trade, earn government taxes while boosting the local economy.
“More than half the population (in African countries) is in agriculture, but subsistence agriculture,” said Britto. “We’ll get these farmers to go from subsistence to commercial farming by giving them more technology that recedes in guaranteeing that they have a market. And once they harvest, there is no risk for them, and they become commercial farmers and everybody wins.”
However, a company like AB InBev needs large quantities and doesn’t deal directly with the farmers. The problem lies with the middlemen, who don’t pass on enough of the money paid by the brewer. To combat this, AB InBev ran a blockchain pilot with BanQu in Zambia for cassava farmers. The project helped the brewer to connect with 2,000 local farmers providing them visibility in the supply chain.
While contributing to the economy, it also created a trusted link between the farmer and the company. Africa’s retail-banking penetration stands at just 38% of GDP, which is half the global average for emerging markets, according to McKinsey. One of the reasons for this is the lack of proof that a person is earning a stable income.
With blockchain, suppliers of AB InBev were able to prove their creditworthiness and thus become part of the banking system. This allows them to open bank accounts and get a credit line to grow their business.
“There is a whole bunch of subsistence people here. Let’s elevate them to commercial farming and keep the money going round and round the society in a virtual circle. So that this the idea of consumption benefiting the stakeholders,” said Britto.
Who is BanQu?
BanQu is developing blockchain supply chain management solutions for brands and companies. Its solution is currently live in 15 countries with global companies.
Last year, Ledger Insights reported on AB InBev’s investment in BanQu through its venture capital arm ZX Ventures. BanQu has developed a mobile application allowing the unbanked to set up a personal digital identification profile. This gives a clear and trusted picture of the transactions conducted by them in supply chains.
Some of BanQu partners include Shell, Mars, RSM, GroFin, SANAD Fund, Monge Foundation, Japan Tobacco and a few others.
At the start of the session Chatham House rules (non attribution) were mentioned. However, the video is online, and other publications have already attributed AB InBev quotes