GLOBAL: SABMiller announces US$500m capacity spend

By Chris Mercer | 17 November 2011

SABMiller will spend $295m to increase production capacity at its Peruvian subsidiary, Backus

SABMiller will spend $295m to increase production capacity at its Peruvian subsidiary, Backus

SABMiller will spend US$555m to increase capacity in Peru and across Africa as emerging markets continue to show strong promise for the group.

SABMiller said today (17 November) that it will spend $295m to increase production capacity at its Peruvian subsidiary, Backus. Separately, the Peroni brewer said that it will spend $260m to expand capacity in the African countries of Zambia, Ghana, Uganda and Tanzania.

The brewer did not put a specific time period on the investments, but its commitments came as the firm's half-year figures showed strong contributions from both Latin America and Africa

While profits declined in Europe and North America, earnings before interest, tax and amortisation rose by 16% and 23% on an organic basis in Latin America and Africa respectively, SABMiller said today.

In Africa, SABMiller has seen particularly strong consumer demand for Castle lager. However, it is also working on a range of cheaper beers, using ingredients such as sorghum and cassava, in order to push more consumers out of homemade alcohol and into beer.

SABMiller's Africa MD, Mark Bowman, said: “The positive economic backdrop in Africa, very favourable demographics and current low levels of consumption underpin our confidence." The $260m spend is on top of a $1.5bn investment in African operations over the past five years, he added.

In Peru, the $295m investment will be primarily used to increase capacity at breweries in Ucayali, Cusco, Lambayeque, Lima and Arequipa. Interim president of SABMiller-owned Backus, Luis Eduardo Garcia Rosell, said: "Peru has seen strong growth in recent years and economic forecasts remain positive, with average annual GDP growth of 3.3% predicted until 2020." 

Peru's per capita beer consumption is around 38.2 litres. By contrast, Brazil, a much more developed market, has per capita consumption of 65.4 litres. For comparison, the US stands at 79.8 litres.

Sectors: Beer & cider, Emerging markets – BRIC

Companies: SABMiller, Castle

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