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SABMiller's experience prepares it for final frontier
October 29, 2009
If Captain Kirk of Star Trek fame had been involved in the beer industry rather than space travel he might have been remembered for saying: "Africa the final frontier."
Talking of travel, surely it will soon be possible to travel across the entire world in an SABMiller delivery truck? There may be large chunks of Africa where you'll have to hop onto a Castel truck, but they're sort of like family so it's almost the same thing.
SABMiller's plans for Africa are vintage SABMiller stuff. The group has an overall strategic plan, which has been developed on the back of experiences in other global markets, but it is completely flexible when it comes to implementation.
What other major global beer player would have been happy to seal a multimillion dollar deal with the slaughter of cattle? The land deal may work out, it may not; if it fails it can be written off as comparatively cheap school fees. If it succeeds it could pay hefty dividends.
It is this flexibility that has been key to the group's success in becoming the second-largest beer producer in the world.
The nature of local partnerships, the route to market, the product portfolio mix; handling these sorts of issues requires a keen sensitivity to individual circumstances and attitudes in each country. It requires an ability to adapt and the management resources to oversee the process.
SABMiller's ownership structure, frequently involving key stakeholders at local country level, must require much more management time and attention than the alternative model of 100 percent ownership throughout, but it offers more flexibility.
To the extent that the group is ahead of rivals such as Heineken in the bid for Mexican beer group Femsa, it is because SABMiller can better accommodate the demands of Femsa's controlling shareholders, who apparently want to hold onto a stake in the enlarged SABMiller. page 3
Durban's flight of fancy
Aviation is one of the industries hit the hardest by the global economic meltdown and even now, people in the airlines business don't know when there will be an upturn in air traffic.
They say there is an improvement, but it is on a smaller scale. This reality makes the job of Dube Tradeport and Airports Company South Africa (Acsa) to attract direct international flights to the new La Mercy International Airport difficult.
Dube Tradeport is the company handling the R6.8 billion project for the KwaZulu-Natal government and Acsa.
This week SAA said it would not make sense to introduce any direct international flights to Durban because Johannesburg was the major hub.
Chris Smyth, the acting chief executive, said it was cost-effective to continue using OR Tambo for international flights.
The La Mercy airport will be commissioned ahead of the World Cup. International airlines who already fly to South Africa said they would fly more often during the tournament, but none of them have plans to fly directly into Durban, which will host one of the two semi-finals.
Lufthansa, Thai Air, TAP Portugal, Singapore Airlines and EgyptAir all said direct flights to Durban did not make business sense. Singapore tried the route before and pulled out because it was not viable.
Thus far, Emirates is the only major airline that has heeded Dube Tradeport's call and is already running a daily flight out of Durban to Dubai.
Perhaps Dube Tradeport should start by convincing SAA to introduce a direct international flight to Durban because that might indirectly bring in the other airlines through the Star Alliance network.
Star Alliance is the largest airline network with 25 airlines that have 30 percent market share of the world's air traffic.
In fact, Dube Tradeport should consider approaching Star Alliance directly to introduce La Mercy airport to the network.
Let them price cake
A question from new ANC MP Manana Florence Tlake took the cake, so to speak, after she noted yesterday that the prices of gold, platinum and crude oil were all on the way up.
Tlake, a Free State MP serving on the National Assembly finance portfolio committee, asked Finance Minister Pravin Gordhan for his projections "beyond January 2010" of the price of oil, including cooking oil, which she said was important to provide chips for her children.
Gordhan referred the question to Marissa Fassler, the chief director of macroeconomic policy. Without blinking she said crude oil was selling at about $77 (R599) now, but had fluctuated from $140 down to $40 a barrel at one point.
She declared it a moving target.
As for cooking oil, she said: "That is the function of sunflower seeds."
She had to admit she was not sure about the consumer price index level of this particular product but it had, she believed, been suffering from a high inflation rate. "It is still very high."
Asked about collusion by companies producing milk, bread and other staples, Gordhan referred the question to Treasury official Kuben Naidoo.
He declared that South Africa had "uncompetitive product markets", but Gordhan was not satisfied, asking him to explain the concept in layman's terms that could be understood by Joe Public.
Naidoo gave it another shot. "In some markets there are too few players," he said, explaining that instead of competing to bring prices down and deliver better services they set prices at a higher level and designated different areas - such as a part of Johannesburg - to operate in as a monopoly. However, the good news was that the Competition Commission and the Trade and Industry Department were "trying to reduce the collusion of cartels".
Responding to the suggestion that the fines imposed for cartel behaviour should go to good causes, Naidoo said the money was paid into the national revenue fund - the state's bank account - but the Treasury was "willing to engage" on this idea.
Edited by Peter DeIonno. With contributions from Ann Crotty, Slindile Khanyile and Donwald Pressly
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