Beer, soft drinks drive growth

The Star Early Edition - - BUSINESS REPORT - Nom­pumelelo Mag­waza

HIGH vol­umes of beer and soft drinks con­sumed by the African and Latin Amer­i­can mar­kets drove SABMil­ller’s growth, while the Asian Pa­cific mar­ket lagged be­hind. De­spite this, the world’s sec­ond largest brew­ing company be­lieved that trad­ing con­di­tions ahead will re­main chal­leng­ing.

It said that while its top line growth was pow­ered by Africa and Latin Amer­ica, other mar­kets such as China and Aus­tralia recorded much lower vol­ume. SABMiller man­u­fac­tures al­co­holic and soft drink bev­er­ages in Latin Amer­ica, Africa, Europe and Asia, among other mar­kets.

SABMiller joins other con­sumer-ori­en­tated busi­nesses in re­port­ing dis­ap­point­ing earn­ings in the third quar­ter as a spend­ing slow­down in Asia com­pounds stag­nant growth at home.

The brew­eries’ or­ganic earn­ings be­fore in­ter­est, taxes and amor­ti­sa­tion (Ebita) grew 3 per­cent in the six months to Septem­ber. The company said to­tal bev­er­age vol­umes for the six-month pe­riod to Septem­ber grew by 1 per­cent, with larger vol­umes down by 1 per­cent. Rev­enue grew by 5 per­cent, “driven by de­vel­op­ing mar­ket op­er­a­tions in Latin Amer­i­can and Africa”, it said.

SABMiller chief ex­ec­u­tive Alan Clark said: “We con­tinue to grow earn­ings in the first half with chal­leng­ing trad­ing con­di­tions mit­i­gated by on­go­ing ef­fi­cien­cies. Group net pro­ducer rev­enue was driven by lager growth in Africa and Latin Amer­ica and strong per­for­mance in our soft drinks busi­nesses in Africa.”

Ron Klipin, a port­fo­lio man­ager at Cratos Wealth, said un­like its com­peti­tors such as the in­dus­try leader An­heuserBusch InBev, SABMiller had made strides in the emerg­ing mar­kets in­clud­ing Africa, Latin Amer­ica and Asia.

“Emerg­ing mar­kets have been record­ing a far more ro­bust growth com­pared to their de­vel­oped peers. But if one looks at the de­vel­oped world like Europe there has been a lack in th­ese mar­kets’ growth, ex­cept for some pock­ets of growth emerg­ing in East Europe,” said Klipin.

He said in many emerg­ing mar­kets growth in dis­pos­able in­come had been ev­i­dent which means that there was a more buoy­ant growth in con­sump­tion ex­pen­di­ture.

“This is the ben­e­fit of SABMiller’s foot­print in th­ese emerg­ing mar­kets, com­pared to its com­peti­tors, who are much more re­liant in de­vel­oped mar­kets.”

In Africa the group’s Ebita grew by 3 per­cent or 9 per­cent on an or­ganic, con­stant cur­rency ba­sis. This was driven by vol- ume growth, pric­ing and a fo­cus on cost pro­duc­tiv­ity.

“Cas­tle Lite led the ro­bust pre­mium per­for­mance and we also grew strongly in the af­ford­able seg­ment,” the group said. De­spite the weak con­sumer en­vi­ron­ment in South Africa, SABMiller ben­e­fited from the vol­ume growth in lager and soft drink bev­er­ages. With Cas­tle Lite, Cas­tle Milk Stout and Cas­tle Lager lead­ing the pack.

Soft drinks vol­umes grew by 9 per­cent un­der­pinned by price re­straints and pack in­no­va­tion.

In Tan­za­nia and Zam­bia newly im­posed ex­cess reg­u­la­tion re­sulted in lager vol­ume de­cline of 7 per­cent and 16 per­cent, re­spec­tively. But Nige­ria recorded ro­bust lager vol­ume growth. Tra­di­tional beer in Zim­babwe, Chibuku Su­per con­tin­ued to per­form and was now avail­able through­out the coun­try.

The Aus­tralian mar­ket recorded 1 per­cent less in vol­ume growth while vol­umes in China slid by 3 per­cent. Lager vol­umes in the Euro­pean mar­ket re­mained at the same level as the pre­vi­ous pe­riod. – Ad­di­tional re­port­ing by Bloomberg

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