AB InBev set to spur growth of beer brands

CityPress - - Business - JUSTIN BROWN justin.brown@city­press.co.za

An­heuser-Busch InBev (AB InBev) is look­ing to bring its Bud­weiser, Stella Ar­tois and Corona beer brands to the lo­cal mar­ket and the rest of Africa. In Oc­to­ber, AB InBev bought SABMiller for more than $100 bil­lion (R1.3 tril­lion) to cre­ate the world’s largest beer maker. One of its pri­mary rea­sons for con­clud­ing the deal was to gain a foothold in the African mar­ket. Ri­cardo Tadeu, pres­i­dent of the new Africa zone in AB InBev, told City Press that the com­pany was look­ing to in­vest in two new pro­duc­tion lines in South Africa at an es­ti­mated cost of be­tween $100 mil­lion and $140 mil­lion. How­ever, Bloomberg quoted Tadeu as saying that AB InBev could make an in­vest­ment of $150 mil­lion and $200 mil­lion in the two new South African pro­duc­tion lines. Tadeu said the num­ber of lo­cal jobs to be cre­ated was not yet known. He said AB InBev was plan­ning a new plant in Nige­ria. The last in­vest­ment that SABMiller made in terms of new ca­pac­ity in South Africa was in 2008, he added. With re­gard to the rest of Africa, AB InBev was fo­cus­ing on or­ganic growth. “Africa is the place to be,” said Tadeu. The com­pany cur­rently has op­er­a­tions in 14 African coun­tries and has a pres­ence in a to­tal of 40 African coun­tries. Tadeu said AB InBev was look­ing to pro­duce Bud­weiser and Stella Ar­tois at its lo­cal plants. The com­pany also wanted to in­tro­duce low- or no-al­co­hol prod­ucts to the lo­cal mar­ket. Tadeu said Bud­weiser had no pres­ence in the lo­cal mar­ket, but be­fore it had ac­quired SABMiller, an im­porter had brought Stella Ar­tois and Corona to the coun­try. At present, the lo­cal mar­ket share of Stella Ar­tois and Corona amounts to less than 1%. Tadeu said he would like to see the ex­ports of AB InBev beer brands from Africa to other mar­kets reach the 1 mil­lion hec­tolitre mark within 10 years. On the other hand, AB InBev ex­ports 50 mil­lion hec­tolitres a year of Corona, which is a Mex­i­can beer. Tadeu said he would like to ex­port eight AB InBev African beers – in­clud­ing Cas­tle Lite, Kil­i­man­jaro of Tan­za­nia and Nige­ria’s Hero beer – to the US, China, the UK and Aus­tralia.

The im­me­di­ate fo­cus for AB InBev, though, was on South Africa.

“South Africa is the mar­ket that is the most de­vel­oped in Africa,” Tadeu said.

Beer con­sump­tion on the African con­ti­nent was con­sid­er­ably smaller than in other parts of the world, he added.

In South Amer­ica, an­nual beer con­sump­tion per capita was be­tween 55 and 65 litres, while in most African coun­tries, an­nual beer con­sump­tion per capita was be­tween nine and 11 litres.

In com­par­i­son, the an­nual beer con­sump­tion per capita in Malawi amounted to three litres.

Af­ter com­plet­ing its ac­qui­si­tion of SABMiller, AB InBev em­barked on a vol­un­tary re­trench­ment pro­gramme, which re­sulted in 370 em­ploy­ees ac­cept­ing pack­ages.

Tadeu could not com­ment on how much it cost the com­pany to re­trench staff, but said the rea­son for the vol­un­tary re­trench­ment pro­gramme was that AB InBev’s op­er­at­ing model was dif­fer­ent from that of SABMiller, and there were over­laps be­tween the AB InBev head­quar­ters and the Joburg of­fices.

He said AB InBev wanted more peo­ple in the field and at de­pots rather than at com­pany head­quar­ters. “There had to be ad­just­ments,” Tadeu said. Re­gard­ing the re­cent Cab­i­net reshuf­fle here and South Africa be­ing down­graded to “junk” sta­tus by two ma­jor rat­ings agen­cies, Tadeu said AB InBev did not com­ment on po­lit­i­cal events.

He re­it­er­ated that the com­pany was com­mit­ted to South Africa and Africa as a whole, and was con­fi­dent about its long-term fu­ture over the next 20 to 30 years.

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