Drinkers go dry at the tills
SAB looks for growth from the soft drinks division
May 15, 2009
By Thabiso Mochiko
SOUTH Africans have been drinking less beer produced by SAB during these trying economic times, but the brewer is planning to change that.
In the year to March, beer drinkers consumed 25.9 million hectolitres of beer, down 2 percent from last year.
In an attempt to increase the volumes, the beer maker will pump in R300 million to market its brands.
The brewer wants to revive its premium brand portfolio, which is losing market share to Amstel and Windhoek.
SAB, the maker of Castle, Hansa and Black Label, has lost 50 percent of market share in the premium beer market to Amstel. It lost a contract to sell Amstel more than a year ago.
In retaliation, it launched Grolsch and Dreher to compete with Amstel. SAB's overall market share fell to 89 percent.
Norman Adami, the managing director of SAB, said the tougher trading environment provided even more impetus to the company's new strategic direction and imperatives.
"We now understand the new realities," said Adami.
Apart from the economic downturn, the other reality includes the fact that its "long-term partner has now become our competitor". Adami said the company was still happy with Grolsch's performance.
Yesterday SAB reported an 8 percent decline in earnings before interest, tax and amortisation to $943m (R8.1 billion).
It blamed the lower beer volumes on the absence of Easter trading in the reporting period; a decline in both premium and flavoured alcoholic beverage volumes; and regional regulatory impacts, including the delay in awarding liquor licences to shebeens, especially in the Western Cape.
Sales in South Africa grew 11 percent to $4.9bn.
Adami said: "The South African market has great potential despite current economic pressures. We have managed our way through numerous economic cycles, and (we) are fully equipped to do so this time too."
Growth is expected to come from the soft drinks division, which increased volumes by 4 percent, buoyed by strong growth in sparkling soft drinks. SAB would work closely with Coca Cola South Africa to boost its sales and expand its retail footprint.
SAB's parent company, SABMiller, said that group profit dropped 7 percent to $1.88bn.
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