We create and share value through our operations and relationships. We do this by giving back to stakeholders from the returns gained as a market leader with a diversified portfolio, quality commitment, a unique culture and long-term growth opportunities.
Namibia Breweries Limited is a highly stakeholder-oriented business. Our emphasis is often not on the product we sell, but on how the entire business contributes to the well-being of the system in which we operate. By framing our material matters as the ways in which we are ‘giving back’, we contemplate the scope, spread and nature of how we allocate capital and resources. These material matters are essential for NBL to be able to give back sustainably and in support of our purpose, Creating a Future, Enhancing Life.
Our material matters sustain our support of and active participation in the lives of our stakeholders. We remain sensitive to not creating dependency in any form but to use commercial opportunities to leverage our brands responsibly.
How do we determine what is material?
We used a formal materiality process in 2018 to identify the matters that enable us to give back to our stakeholders in the short (this year), medium (one to three years) and long term (the next decade).
Inputs into the process
|We considered a range of influences, risks, industry challenges and trends. We were guided by regulatory and legislative compliance requirements while also taking into account the concerns and expectations of our stakeholders.|
Consider, discuss and rank material matters
|Having scanned our context, we identified issues and opportunities which we ranked according to likelihood and impact. We used an external stakeholder lens in our thinking when clustering and consolidating themes into nine material ways of giving back.|
Outcome of the process
|Our nine material ways of giving back support our purpose. We quantify our contribution in terms of financial value (see the value-added statement). We use operational key performance indicators to track over time whether we are increasing value for stakeholders in other ways. This considers our impact, today and into the future, beyond our business boundaries. We recognise that our material matters are dynamic, and that our emphasis and resource allocation priorities will change over time. The principle of giving back will remain constant.|
For this report, the reporting team reviewed the 2018 material matters for relevance, accuracy and completeness. Minor refinements were made, after which the senior leadership team approved the matters above as material for 2019.
Key question: What are we doing to continue creating amazing experiences for our consumers?
Our consumers are from all income levels across a range of geographic locations and feature diverse demographic profiles. As part of giving back to them, our brands aim to remain close to our consumers by involving them in Amazing Experiences, Enduring Impact. In this way we are connecting them to our purpose and offering them products that continue to anticipate and exceed their expectations.
Consumers are experiencing significant strain on disposable income. We therefore ensure that our brands create value by providing a range of quality offerings at different price points while delivering memorable experiences at connection moments.
To remain close to our consumers, we increased the frequency of surveys. The surveys provide us with quicker insights into changing consumer patterns, brand choices within their repertoire and attitudes towards our brands. More frequent surveys also provide us with the agility to refine campaigns and innovate to meet emerging needs. With more frequent brand health studies we keep a finger on the pulse of consumer and market dynamics, and are able to maintain a deep understanding of these.
We are committed to delivering on a growing consumer need for brands that signify their status and individuality, and are aligned to their lifestyle choices by crafting quality products from premium ingredients.
Our consumer-oriented approach contributed to the success of recent innovations. These included the launch of Tafel Radler, new McKane flavours and new advertising initiatives, such as the Windhoek Perfect Time, Perfect Beer and the Tafel Lager Beat of Namibia campaigns. Our marketing campaigns bring brands closer to end consumers and foster relationships that make NBL brands more relevant in their lives.
Key question: What are we doing to encourage our employees to live their purpose?
Our employees are our most valuable asset. Our purpose, Creating a Future, Enhancing Life, is closely linked to the experiences of our 801 employees who are spread across the country – from the head office and manufacturing plant in Windhoek to six depots.
We continue rolling out and embedding our breakthrough architecture to achieve the strategic outcome: Everyone Purposefully Producing Breakthrough Everywhere. This has become a practical aspect of every decision and project. When we combine a breakthrough approach with diverse internal skills and competencies, we can deliver the results that build a sustainable business while employees find meaning in their roles.
To track our progress against our vision metric for employees, NBL participated in the 2019 Great Place to Work Employee Engagement Survey and was accredited as a Great Place to Work® in Africa. NBL was ranked overall 5th place in the large corporate organisations as best place to work for.
What did the survey tell us about employee engagement?
The four top statements for NBL employees are:
- I understand my role and contribution to the O&L Group vision.
- The senior leadership team has a clear view of where NBL is going.
- Management is competent at running the business.
- I feel good about the ways we contribute to the community.
Key question: What are we doing to produce more and use fewer resources?
Our long-term ability to give back to our stakeholders is intrinsically linked to the availability of the natural resources used in our production processes. We have a responsibility to protect the environment in which we operate for the benefit of all who depend on it, now and in the future.
Our resource allocation decisions are guided by our commitment to Creating a Future, Enhancing Life, and take into account the environmental impact of each product’s entire life cycle – from its development to the disposal of the product and its material components. To reduce our impact, we focus on reducing water and energy consumption and the amount of waste from production processes.
Key question: What are we doing to help our communities to prosper?
We give back to our communities in Namibia in many ways. Our approach is to invest for sustainability and to use our scale and impact as part of the O&L Group. We work closely with the corporate affairs team at O&L Group in co-ordinating projects. The Group’s key focus areas are education and skills development, which we support in some of the key initiatives listed below.
We realise that we, as a Group, can play an expanded role in bringing stakeholders together, and can inspire other parties to support and drive similar initiatives. Being responsive to community interests is key to living our purpose.
Key question: What are we doing to increase our local procurement spend in Namibia?
The limited scale of the Namibian economy makes it challenging to develop competitive local industries. This creates reliance on imported raw materials for the production and packaging of NBL’s beverages. Despite this, there is an expectation from the Government and communities that local companies in Namibia, such as NBL, should stimulate job creation and support broader economic growth and stability.
We are actively exploring options to develop local suppliers, particularly in manufacturing, logistics services, marketing and advertising. This includes aiding small and medium-sized suppliers, where appropriate. For example, we offer preferential payment terms and provide technical and administrative support to improve business efficiencies.
In our supplier selection, we consider each supplier’s sustainability and exposure to NBL. Although we want to be a prime customer, we are also sensitive to creating commercial dependency.
We have strategic, long-standing relationships with European suppliers from whom we import 100% of our malted barley and hops requirements for beers brewed according to the Reinheitsgebot. The procurement of a major portion of ingredients is based on long-term contracts – some running three to four years into the future – to ensure the required volumes and quality. Packaging material, which includes bottles, cans, cartons and shrink foil, is predominantly imported from South Africa.
We engage with critical suppliers through quarterly reviews. These reviews include an open discussion on quality issues, areas of poor communication, pricing trends and opportunities for innovation. This helps to establish a mature relationship based on trust and continuous improvement.
In our primary transport services contract with Imperial Managed Solutions Namibia (Proprietary) Limited (IMS), we create opportunities to give back by encouraging subcontracting to small local transport companies. More than 53% of all primary transport loads have owners who were previously disadvantaged.
Key question: What are we doing to share even more value with our customers?
Our customers encompass formal and informal wholesale and retail trade outlets in the markets in which we operate. These include, for example, supermarkets, liquor stores, shebeens, pubs and other hospitality outlets.
We create value for our customers through our direct interaction with them, and via our strategic partnership with Heineken South Africa.
Our customers benefit from incentive programmes that share value through increased sales volumes and market share growth. In the informal market, for example, we support shebeen owners with point-of-sale material and advertising.
Key question: What are we doing to support the Government through these hard times?
As a market leader in Namibia, we contribute to the stability and functioning of our country. We recognise our responsibility to do business in a way that contributes to inclusive and sustainable development for all stakeholders.
We support the Government’s Growth at Home strategy, the Harambee National Prosperity Plan and, ultimately, Vision 2030. We also continue to engage with the Government on key issues – such as water security – to ensure alignment on the challenges facing Namibia.
As a good corporate citizen, we endeavour to reduce the harm and social cost associated with alcohol abuse. We market alcoholic beverages in a way that encourages responsible consumption and aims to reduce alcohol-related harm. We do this in collaboration with Government, the community and non-governmental institutions in Namibia. This includes our leading involvement in the Self-Regulating Alcohol Industry Forum (SAIF), which comprises major alcohol producers and distributors in Namibia.
SAIF membership is based on voluntary compliance with a code of conduct that prescribes world-class standards in self-regulation to prevent the negative consequences of alcohol abuse. This year we adopted the principles of the new aware.org regulations recently agreed to by all the major alcohol companies in South Africa. While the new regulations are not a major deviation from the code of conduct previously in place, they do provide stricter parameters for the flighting times of advertising and other marketing activities.
An O&L Group Committee ensures that an independent evaluation against the code is done on all NBL marketing and sales campaigns, advertising and promotional material.
Key questions: What are we doing to grow returns despite economic challenges?
Our shareholders and funders require historical and forward-looking information to make an informed assessment about their capital allocation and acceptable levels of risk. To retain them as long-term partners who support the business, we communicate a balanced overview of our performance, strategy and progress with implementation. We give back to them by paying finance costs on borrowings and dividends. Total dividends to approximately 206.5 million shareholders have increased by an average of 8% per year.
We know that strained local and international operating environments can negatively impact our ability to trade and grow. We are transparent about the key strategic risks facing the business and explain how these are effectively mitigated to ensure that NBL remains future fit and well positioned to capitalise on growth opportunities. Our position in the O&L Group, and the stability of having the Group as a strong, stable shareholder, contributes to our financial resilience.
Key question: What are we doing to entrench a proactive risk culture?
As a market leader, significant employer and a proudly Namibian brand owner, we manage a wide range of risks on behalf of our stakeholders, as they can be affected by even small disruptions or unexpected events at NBL. Our ability to mitigate these risks gives stakeholders peace of mind, which is a way in which we earn their trust and deliver on our promises.
Rapid social, economic and technological change is challenging business stability. In particular, information and technology (IT) are receiving a stronger focus in light of increasingly pervasive cybercrime and risks to data security. For NBL, loss of intellectual property as a result of cybercrime or uncontrolled sharing of sensitive information could provide a competitive advantage to other role players.
Our Senior Leadership Team is tasked with implementing our strategy, including ensuring that internal controls are in place and function effectively to mitigate risk to operations. We manage significant operational risks through sophisticated IT systems. The ERP system, for example, is used across all Windhoek-based operations. This system helps us to optimise planning, particularly as complexity intensifies with increasing numbers of new stock-keeping units.
When bringing in new technology or equipment, we follow an evaluation process that considers price, state-of-the-art applications and after-sales service. We arrange for site visits, where relevant, to evaluate suppliers and expose employees to different environments, while ensuring that contracts include training and maintenance elements.
The majority of our depots have generators to mitigate the risk of unreliable power supply, enabling employees to maintain effective customer service and adhere to stock management principles at all times.
The Board is ultimately responsible for managing the Group’s risk and setting its risk appetite. We do a risk and opportunity assessment every year to identify the critical business, operational, financial and compliance exposures facing NBL, and to determine the adequacy and effectiveness of controls.
The Audit Committee, in conjunction with the Management Risk Committee, assists the Board in monitoring the effectiveness of the risk management process for risks like IT-related items, fraud and corruption, and compliance with the risk standards adopted by the O&L Group.
We use enterprise risk management software to ensure a unified and structured risk management approach across the O&L Group. Our risk approach is preventative, and our methodology is aligned to ISO 31000.
To support ethical business practices, we have a 24-hour Tip-offs Anonymous hotline and maintain a zero-tolerance stance on fraud. The hotline is operated by a confidential, independent supplier.