AB InBev ‘very excited about Africa’
Praise for SABMiller know-how as CEO shows off SA and region to his investors
● The outlook for Africa and SA is positive, according to Carlos Brito, CEO of AnheuserBusch InBev (AB InBev).
Brito, the CEO of the world’s largest brewer — which was formed following AB InBev’s $79bn takeover of SA’s SABMiller in 2016 — said in Johannesburg this week that while others saw “a lot of uncertainty, we see opportunity … We are very excited about Africa.”
He told reporters: “We look at fundamentals, we look at the middle class growing, education standards getting better, the population that’s very young, governments getting more accountable, investments, we look at all the [things] that will drive growth.
“We don’t get too impressed about this year, the next year and the next three years. We’re thinking five, 10, 20 years out, and for us Africa is definitely the place to be.”
Brito unveiled expansion plans that include AB InBev launching its first brewery in Mozambique in the second half of 2019.
The brewery will have the capacity to produce more than 2-million hectolitres of beer annually. The company said it would not disclose the value of the investment at this stage.
Brito said: “We need that capacity in Mozambique. It is growing very fast.” Sales in Mozambique grew about 20% in the first half of 2018.
The company will also build a $100m (about R1.35bn) brewery in Tanzania as it races rival Heineken to capitalise on growing beer consumption on the continent.
AB InBev brought 100 global investors who cover the company to SA for its summit, which is held every three years. At one of the events, hosted at the Copper Bar in Bryanston, Britos mingled with guests, and sat cross-legged on the floor during a discussion with the media.
The summit showcased its African business, synergies with SABMiller, growth opportunities and talent.
Britos said SA was the company’s most important market in Africa, a location from which it exports brands Budweiser, Stella Artois, Castle Lite and Castle Lager to the rest of the continent.
“Investors are very curious because they know that the SAB combination was retransformation for us,” he said.
He said in previous mergers the group had the opportunity to achieve top-line and cost synergies.
But for the first time “in six transnational, big multinational business combinations we’ve done, we use the term ‘intellectual synergies’ because during the integration period [with SABMiller] we found so many frameworks that were very interesting and new to us that we learnt with our new colleagues”.
One of these is “the category expansion framework”, which is a way to understand beer market maturity and how to respond in order to continue to appeal to consumers.
“That was the first time in a big business combination like this that we felt a wealth of knowledge that was remarkable [and] that we have not found in other transactions,” Brito said of the merger with SABMiller.
“We found very talented people that brought us knowledge on things we had not much knowledge about. The framework is just one example. We brought investors to feel the opportunities.”
The summit also showcased global capabilities being developed to take advantage of growth opportunities presented by the beer category. This included technology and best practices, he said.
“Showcasing in areas of best practices in terms of capabilities that we consider key, for us to take advantage of the opportunities that we know the beer category offers, so we can take advantage before anyone else can. We want to be there first.”
In Nigeria the group recently commissioned a new brewery to grow its footprint there.
Although political changes in Zimbabwe since former president Robert Mugabe was ousted last year may improve the economy, AB InBev will invest less as it holds a noncontrolling stake in operations. The group also plans to focus less on Francophone countries as it also holds minority stakes there.
Ricardo Tadeu, the Africa Zone president at AB InBev, said the company was focusing on markets where it exercised majority control. He said in SA its outlook over the medium to long term was positive.
AB InBev understood that the first half of 2018 was one of transition for SA after Jacob Zuma was removed as president, making way for President Cyril Ramaphosa to restore confidence in an ailing economy.
Second-quarter beer volumes and revenue declined locally and were impacted by the one-percentage-point VAT hike in April and fuel price increases.
“We understand that this is a moment and this is going to change in the medium term. We remain confident, we are launching brands, we are investing and we are very confident that we’ll take the benefit from this investment,” Tadeu said. “We are launching new local brands like Castle Free.” The company has also brought global brands such as Budweiser, Corona and Stella to the country.
“In the medium term SA is going to grow above the average,” said Tadeu.
The group is also forging ahead with plans to develop its local supply chain. Tadeu said the company launched a challenge to develop entrepreneurs and create 10,000 jobs by 2022. It has reached nearly 20% of that target.
It will also commission a new returnable bottle line which will be 80% operated by women. The company supported 12,000 new local suppliers in the supply chain and AB InBev expected to grow the local production value by 25% in 2018 compared to 2017, he said.
We remain confident, we are launching brands, we are investing and are very confident we’ll take the benefit from this investment Ricardo Tadeu
Africa Zone president at AB InBev