Barriers to Entry for Black Industrialists - The Case of Soweto Gold's Entry into Beer

Abstract

The South African economy is characterized by concentrated industries, which pose particular challenges for the increased participation agenda. One such industry is the beer industry, where the competition authorities have failed to address market power and the structure of the industry continues to be shaped by past state interventions and entrenched interests. The case study uses the experience of Soweto Gold, a recent entrant, to illustrate the barriers to entry and expansion in the beer industry. The study highlights the new opportunities created by the niche craft beer segment of the industry and the interaction between the mainstream and craft brewing. The lessons that have emerged, are the difficulties that entrants face in getting product to market when the supply chain vertically integrated. The study also highlights some broader lessons for government support programs, by illustrating the challenges where capabilities exist and finance has been provided.

Keywords: Barriers to entry, Beer, Soweto Gold, Black Industrialists

JEL Classification: L1, L2, L5, L66