Brewers heading for World Cup showdown

Brewers heading for World Cup showdown

SABMiller has said it is confident of maintaining its dominance of the South African beer market, despite the challenge from Heineken and Diageo.

The chairman and MD of the brewer's South African Breweries (SAB) division, Norman Adami, warned rivals that the Castle lager brewer will not be outgunned on its home turf.

SAB is facing fresh competition from Heineken and Diageo, which earlier this year opened a ZAR3.5bn (US$473m) brewery on the outskirts of Johannesburg in an effort to capture share in Africa's largest beer market.

"We don't believe we will be outspent in the marketplace relative to our portfolio," Adami told analysts and investors in London this week. He said SAB would be "very aggressive" in protecting its share of the market.

The brewer saw its beer volume sales in South Africa fall by 1% for the 12 months to the end of March.

"The competitors indicated that they aspire to achieve a 20% share of the market. We've said that we intend to, in average and over time, achieve a 90% market share," said Adami.

SAB's current market share is between 88% and 89% in volume terms, according to Adami, who added: "With the overall category growing, it's not a zero sum game."

SAB plans to launch four new brands on draught in South Africa this year, supported by strong marketing spend.

"Up until now, we've basically focused on international premium brand draught and obviously Castle draught," Adami continued. "We're now introducing our premium, our power brands into draught and that will require significant investment."

With the FIFA World Cup set to kick off in South Africa on 11 June, SAB and its rivals are jostling to get their beers in front of resident and visiting fans.

A row has broken out this week over Heineken's recommended price for bottles of Amstel lager. SAB claims that licensees would make more money by selling its Castle lager instead, according to Bloomberg news.

Earlier this month, SAB said it had upped beer production and set aside ZAR170m (US$22.4m) to spend around the World Cup.