World: SABMiller taught the world's brewers a lesson

This week's acquisition by SABMiller of Columbia's Grupo Empresarial Bavaria adds another chapter to the story of a South African company that taught the world's brewers a lesson, Mail&Guardian commented on July 22.

SABMiller took to the world stage by listing in London in March 1999. In the period since, the company's share price has appreciated by 144% to Wednesday’s close of 968 pence (R112,47).

Their journey includes an all-time low of trading around 350 pence. That low was reached towards the end of 2002. The company had spent the latter half of 2002 taking strain from its name-changing acquisition of Miller Breweries for $5,6-billion. That transaction still has analysts divided. Renier Swanepoel, an analyst at UBS Warburg, acknowledges that Miller has been a difficult but worthwhile acquisition. He notes that the important thing is that "they have got it to where it was before the purchase" in terms of profitability. Another analyst, who declined to be named, sniffed at the Miller acquisition, saying, "the jury is still out" on whether it was a good deal. People who hold that view believe that SAB acquired Miller to fend off a possible takeover.

SABMiller's trail began with the purchase of breweries in the Czech Republic and Poland. The unnamed analyst says that SABMiller "has done well in developing countries but not too well in developed countries". That is because, apart from acquiring Miller in the United States, SAB Miller acquired Birra Peroni in Italy. This is yet to make serious money.

Swanepoel says that the challenge in Bavaria will be to fend off stiff competition from Interbrew Ambev, the world's largest brewer. "It is not going to be an easy ride," he says. The next phase in the global beer wars is for the top five brewers to try and swallow each other.

23 July, 2005