Stella is Always Delicious: The Nationalization of the Egyptian Beer Industry

By Omar Foda
Submitted to Session P4931 (Rethinking State-Society Relations in Modern Egypt, 2017 Annual Meeting
Hist
Egypt;
19th-21st Centuries; Trade/Investment;
LCD Projector with Audio Patch or Speakers;
The nationalization of the private sector, beginning with the 1956 nationalization of the Suez Canal, was one of the key components of President Gamal Abdel Nasser’s reform package. Yet, there has been little discussion on what nationalization meant for individual companies. This paper uses unstudied Egyptian and Dutch archival records on the nationalization of the Egyptian beer industry in the period from 1961 to 1975 to fill this gap.
Prior to nationalization in 1963, the Egyptian beer industry was led by the interconnected triumvirate of Crown Brewery, Pyramid Brewery, and Heineken Brewery. In the 1930s, Heineken had bought a controlling interest in the Cairo-based Pyramid and then orchestrated Pyramid’s purchase of significant stock in the Alexandria-based Crown. Despite the fact that the three remained ostensibly independent—and they had the internal feuds to show for it—the lucrative sale of the dominant beer brand in the Egyptian market, Stella Beer, held them together. This balancing act was thrown asunder when the Egyptian government started the nationalization process in 1961.
On the brewery side, Dutch and Egyptian decision-makers fought against each other and the government to preserve their lucrative multinational venture. The Egyptian government, for their part, treated these companies with similar distrust, as it viewed them as prime examples of the foreign influence stifling the Egyptian economy. As a result, nationalization was a protracted struggle that took two years to resolve. Even then, the Egyptian government had to deal with the fallout from the nationalization well into the 1970s.
Once Crown and Pyramid were incorporated into the government as the conglomerated Al-Ahram Beverage Company, part of the General Corporation of Food Industries, they faced new advantages and challenges. The most significant advantage was that they now had a monopoly on beer sales in the country. However, nationalization brought numerous issues including the flight of capital and expertise, the inability to use imports to fill production gaps, and most of all administrative and bureaucratic bloat. Nevertheless, if they adhered to certain provisions about monetary matters, imports, and employments, the company was free to make and sell the beer they wanted.
Thus, this paper posits two arguments. First, that nationalization was not a violent rupture but a slow, messy process. And second, that Egyptian companies had a good deal of autonomy after nationalization, if they played by the rules of the government.