just On Call - SABMiller ups Latin America volume forecast

SABMiller believes that stronger consumer demand for beer and more efficient production, backed by strong lobbying, are set to see Latin America continue to emerge as a key region for the brewer over the next five years.

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SABMiller has increased is medium-term forecast for beer sales by volume across Latin America. During an investor conference with analysts yesterday (5 July), it said that group volumes in the region would rise by between 5% and 8% on average per year over the next three to five years, versus a previously predicted range of 4% to 6%.

Stronger volumes should be backed by the Peroni brewer's efforts to make its business more efficient. Together, these two factors should drive strong margin gains in Latin America over the next few years, it said.

This is despite subdued pricing, due to fresh concerns about what consumers can afford. SABMiller predicted that its revenue per hectolitre in Latin America would rise by between 2% and 4% per year over the next three to five years. It previously expected a rise in the range of 3.5% to 5.5%.

The brewer plans to back-up its growth with a more proactive approach to government lobbying, according to the group's president for the region, Karl Lippert. "We want to be a lot more proactive in terms of making recommendations to government," he told analysts.  

"We are taking lessons from other industries, such as tobacco industries, on how you can make progress on that front," he said.
  
In the more immediate future, SABMiller is pleased with a rebound in volumes Colombia, where it owns around 97% of the market via its Bavaria subsidiary. Sales struggled in the year to February 2011 after the Colombia's Government raised duty tax on beer from 3% to 16%. Since cycling this rise, however, Lippert said that the group is back in growth.

Across the region, SABMiller expects to expand production capacity at existing breweries to help fuel growth. It does not currently have plans to build any new breweries.

Latin America accounted for 31% of SABMiller's earnings in its last fiscal year, to the end of March.

There has been speculation that SABMiller could launch a bid for Brazil's second largest brewer, Schincariol. For more on this, click here.

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