E-Malt.com News article: 3550

South Africa, Johannesburg: South Africa’s beer consumption is once again increasing in line with the performance of the general economy, as shown by the 4 % rise in sales volume achieved by SABMiller's South African beer business for the five months to August, Business Report posted on October 28.

The strong growth in beer consumption was a sign that "there is growth in consumer demand at all income levels and not just among the well-to-do", SABMiller chief executive Graham Mackay told a briefing yesterday. It meant that the "decoupling of the beer market from the general consumer economy has ended".

During the 1990s and in the first few years of this decade, beer had underperformed the general economy, reflecting the fact that the benefits of economic growth had largely been restricted to the higher-income groups, he said. Before the 1990s, beer consumption had tended to do better than general consumption. "On average, for the foreseeable future, we would expect growth of 2 to 3 percent in the South African beer market."

The local market's strength made a significant contribution to the 4 % rise in volumes achieved by the group in the five-month period. Results for the six months to September are due to be released on November 18. The rest of the African continent continued to "produce growth in a steady fashion".

In North America, Miller's US domestic sales to retailers rose by 2 % for the period to mid-September, led by the continued strong growth of Miller Lite. Mackay said the advertising war between Miller and Budweiser had generated more interest and higher consumption in the US beer market, and Miller was increasing its market share. "Coors is probably the biggest loser in the battle," he said. While management had made progress on the three-year turnaround plan at Miller, "it will be about 12 to 18 months before we can say that this is a business running to SAB standards".

China was performing strongly against the previous interim, when severe acute respiratory syndrome had hurt sales, he said. "Although we've achieved high single-digit growth, China is not a big contributor to profits."

India was a very difficult operating environment, but the group was "building a business for the long term" in that country. Strong turnover in Russia, Romania, Poland and the Czech Republic underpinned a solid performance in Europe. Mackay said SABMiller was a seller of its 49 % stake in Tsogo Sun "at the right price". The share lost 22c to close at R87.88 yesterday, while the beverages sector fell 0.24 %.


30 October, 2004