Insight - SABMiller reinforces commitment to Africa
SABMiller has held a conference in South Africa to reaffirm its commitment to Africa, as countries across the continent continue to show promise for beer sales.
SABMiller is investing US$370m on capital projects in Africa in the current financial year, to the end of March 2010, the brewer's managing director for Africa, Mark Bowman, said yesterday (28 October).
This is set to level off at around $200m per year for following years, he said during a press conference in Johannesburg.
In a sign of Africa's growing importance to SABMiller, the continent is to be broken out as a separate operating division in SABMiller's upcoming half-year results, a spokesperson for the brewer confirmed to just-drinks today. The continent, exluding South Africa, which is always reported individually, has traditionally been combined with Asia on results day.
SABMiller expects to have opened four new breweries across Africa - in Angola, Mozambique, Sudan and Tanzania - by the end of the fiscal year. Building work is due to begin in Tanzania next week.
SABMiller's lager volume sales in Africa, still excluding South Africa, grew by 3% in the six months to the end of September, the brewer reported in a recent trading update.
Effects of the global economic downturn on Africa have varied from country to country, but a spokesperson for the brewer said: "We remain confident in Africa's growth prospects. Africa has not been affected by the downturn as badly as other regions in the world."
Uganda and Zambia were SABMiller's best performing markets in terms of volume growth in the half-year, with lager volumes up 18% and 23% respectively.
Tanzania, where the firm is embroiled in a legal dispute with Diageo's EABL subsidiary, saw volumes drop 6% against a strong first six months in the previous year and a "soft economy" in 2009. Botswana, meanwhile, reported a 47% drop in volume sales due to a 30% social levy on alcohol, introduced by the Government in November 2008.
A large part of SABMiller's growth strategy on the continent is to reduce its reliance on imported raw materials for brewing.
The brewer currently imports 82% of raw materials required for its brewing operations across Africa.
"We plan to directly employ 44,000 farmers [across Africa] by 2015," said the SABMiller spokesperson. "Tanzania is expected to be fully self-sufficient for our barley needs in four-to-five years. It's a win-win for everybody."
Aside from brewing, SABMiller is also keen to grow its non-alcoholic drinks business in Africa. Via a strategic alliance with Castel Group, SABMiller is already the Coca-Cola Co bottler in 20 African countries.
SABMiller reported soft drinks volumes in Africa for the half-year to the end of September up by 5%.
In September, the group said it would expand further in Africa by building a brewery in Namibia and acquiring the non-alcoholic Maheu drinks business of Trade Kings Ltd in Zambia.
The wave of major consolidation activity in the beer market over 2008 was followed by weakening volume growth in 2009 as the economic downturn put a dampener on bullish tactics. With the global beer l...
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