Business Day (Johannesburg)

Africa: After Brewing Comes Selling Beer in Continent

Having spent more than $500m last year more than a third of the group's total capital expenditure - to build new breweries in Angola, Mozambique, Tanzania and southern Sudan and upgrade operations elsewhere in Africa, SABMiller now faces the task of marketing and selling in those markets to exploit its new capacity, writes Michael Bleby.

"We had a very exciting year," said Mark Bowman, MD of SABMiller Africa, ahead of yesterday's results presentation. "This year we've got to deliver. We're moving from an operations focus to a sales and marketing focus."

After a year in which SABMiller posted an unexpected 1% decline in pretax profit, mainly due to the weaker European market, the significance of Africa's rising population and increasing wealth -- non- SA Africa accounted for 13% of group earnings in the year to March -- is growing.

One focus for Africa is to grow premium brands. SABMiller launched nine new ones during the year, such as Laurentina Premium in Mozambique and Nile Gold in Uganda, products that CEO Graham Mackay described yesterday as "the sweet spot of profitability". Bowman said these brands, which play on a sense of national pride and command anything from 10% more to double the price of mainstream brands, helped to protect the group's position in the 16 countries in which it now operates.

At the same time as it sells more expensive premium beers, SABMiller is trying to halve the price of mainstream ones. These are relatively expensive to local drinkers and are part of the reason for a per-capita annual consumption of 6l in a continental market that Bowman says could sustain a consumption of 12l -15l.

And while SABMiller plans to consolidate its recent capital spend and work on the softer side of marketing, further expenditure lies ahead. Some continental investments are not even in beer, such as a bottled water business it bought in Ethiopia. While these are an opportunity to learn about the local market, at some point the company intends to go into beer, its core business.

"In five years' time, if we don't have a beer venture (in Ethiopia) we'd have to question the viability of staying," Bowman said, adding that either purchasing an existing brewery or building a new one was "not imminent at all".

Tagged: Africa, Business

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