E-Malt.com News article: South Africa: SAB planning to capitalise on the massive future of kegged beer

Selling more brands of beer on tap will serve as a growth catalyst for South African brewing giant SAB, which is trying to come up with ways to counter competition in the beer market, Business Report communicated on June, 4.

The company has a diverse portfolio that encompasses both mainstream and premium beers but it has decided to increase its tap penetration in the market by 50 percent in the year ahead, Harald Harvey, SAB's executive director of strategy and business support, said at a press briefing this week.

The company would not disclose the number of taps it had at beer outlets.

"We are working on a number of innovations, one of which is the introduction of more sub-zero (temperature) fridges, as well as the establishment of more draught facilities," Harvey said.

He said the increase in the number of taps would mainly be in urban areas, and SAB would also be installing some taps in taverns in township areas for the first time.

"SAB ran a pilot project in the Western Cape between November last year and March whereby Carling Black Label draught taps were installed in nine outlets in urban areas and the response was extremely positive from consumers, including from females, which could suggest the start of a new market being opened up," Harvey said.

The group, which owns the Carling Black Label, Castle, Castle Lite and Hansa brands, highlighted the "continuous evolvement of the competitive landscape" as a challenge, adding that Amstel distributor brandhouse was becoming "more organised".

In the year to March, brandhouse's share of the total beer market grew 2.2 percentage points from 9.9 percent to 12.1 percent of the overall market, while its share in premium beer grew 5.9 percentage points from 52.2 percent to 58.2 percent of the total premium market. SAB's market share has declined from a level of 97.5 percent to about 88 percent due to the growth of these competitors in the market.

A brandhouse spokeswoman has confirmed that the partnership's Sedibeng brewery did not produce draught beer. "Brandhouse distributes both Windhoek draught and Amstel draught in South Africa, which are sourced from the appropriate location for a particular brand," she said.

Harvey said SAB would focus on sustaining and deepening its investments and efforts into its "power brands": Castle, Carling Black Label, Castle Lite and Hansa Pilsner. One of the group's key strategies in the year ahead was to share superior routes to market.

"We are increasing penetration, reach and service in the formal market across the country and will be executing a substantially stepped up draught roll-out programme," Harvey said.

Absa Investments analyst Chris Gilmour said SAB had a "massive built-in advantage" in that it had the capacity to promote "kegged beer" or beer on tap at unprecedented levels: "This may serve as a growth catalyst for the company.

"Kegged beer has a massive future and SAB can already capitalise on that as they have the distribution model already," he said.

Gilmour believed South African beer drinkers preferred bottled beer, but drinkers would slowly start moving to draught beer, if it was promoted more regularly and SAB expanded its capacity.

The company also said it had recently reached an agreement with Fifa and the World Cup host cities to provide beer at the Fifa Fan Fests during the tournament. The beer would be unbranded although there would be some level of product identification.


04 June, 2010