just On Call - SABMiller targets low-income consumers in Latin America
SABMiller is looking to generate strong growth in its Latin American markets by focusing on the introduction of "affordable" products in the region.
At its latest quarterly divisional seminar, held in London earlier today (25 March), the global brewer highlighted its intentions to target lower-income consumers in Colombia, Ecuador, El Salvador, Honduras, Panama and Peru. While the middle class is growing in SABMiller's six core markets, the company said it sees a healthy upside from "attract(ing) these consumers away from low quality local spirits, often produced and sold illegally, by providing affordable alternatives in its portfolio".
Whilst conceding that socio-economic levels are on the rise in all markets, the president of SABMiller's Latin America division, Karl Lippert, noted that around 80% of the population in the six countries are still below socio-economic level 'C' (defined as earning in the region of US$380 per month or less).
"The work across our markets in making products affordable and accessible ... continues to drive our business," Lippert told analysts and media at the seminar. "We believe we can continue to deliver mid-single digit volume growth and upper-single digit revenue growth for the foreseeable future.”
SABMiller also used the seminar to detail the high rates of illegal alcohol production and consumption in the region. Colombia, Peru and Ecuador together account for 94% of the illegal market across SABMiller's LatAm presence, with counterfeit leading the way just ahead of contraband product.
"Our corporate affairs teams are engaging with authorities and helping with the knowledge that our work in the marketplace provides us with," said Andres Peñate, SABMiller's senior VP of corporate affairs in the region.
The brewer concluded the presentation by forecasting medium-term volume growth of between 4% and 6% and EBITDA margin growth of between +60 and +80 bps.
To view SABMiller's quarterly seminar, click here.
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