E-Malt.com News article: 3709

South Africa, Johannesburg: The South African Breweries Limited confirmed on November 22 2004 that it will invest R5-billion in South Africa over the next five years, commencing in early 2005. Approximately half of this is in new expansion. Managing Director Tony van Kralingen said that the decision had been taken as a direct result of SAB’s confidence in the South African economy and its future prospects. The company has invested some R4-billion in South Africa over the past decade, including the construction of the Ibhayi brewery.

“This new expansion project will have two major thrusts: capacity and capability. After about 10 years of relatively static volume, the company has experienced significant growth over the last two years in particular. Our share of the liquor market has increased to just under 60% in 2004, while in the last few years, we have added three new beer brands to the market plus two flavoured alcoholic beverages. During the last financial year, our premium brands achieved a moving annual growth in excess of 40% and our flavoured alcoholic beverages also achieved a moving annual growth in excess of 40% - which increased our market share significantly in the FAD segment.”

“Increasing capability is designed to keep pace with the changing needs and demands of our customers – particularly for variety. Capability is all about flexibility, agility, quicker changeovers for our production lines, shorter planning cycles and the introduction of new packs and brands. Improving capability means that other dimensions are being considered, like our bottle and can size, shape and colour. Other ‘extrinsic’ issues also have to be researched, like labelling and tertiary packaging.”

“This will result in our being more proactive in meeting consumer needs and particularly, with respect to increased customisation coupled with commercial viability. Increasing capability does, however, imply a need to increase capacity, as flexibility and changeovers are capacity-negative.”

“Our breweries are being run very efficiently and this plan is designed to cater for future growth, resulting in a total spend of some R1-billion a year for the next five years on both expansion and maintenance. This investment will create a number of opportunities for employees and suppliers of the company, and as importantly, will boost our company’s impact on the South African economy.”

“While some specialised equipment will be sourced abroad because of proprietary supplier considerations, the company will be taking this opportunity to boost local suppliers and particularly, seek new BEE opportunities in procurement. As a South African company, we are clearly committed to sourcing from local suppliers and as much as we can and targets will be set in due course. As far as local purchasing is concerned, our intention is to source all civil works, building expansions, brewhouse expansions, glazing, roofing, sheeting and pipework locally.”

SAB spent over R700-million with 1500 BEE suppliers in the 2004 financial year, a 21% increase over the previous year. A similar percentage increase in BEE spend is envisaged for the 2005 financial year. The expansions will include additional brew houses, new packaging lines and new storage facilities. The development will be focused around Gauteng, with extensive work also being planned at the company’s breweries in KwaZulu-Natal and the Western Cape. However, the investment in upgrading will affect the five provinces in which SAB has breweries (Western Cape, Eastern Cape, Gauteng, Limpopo and KwaZulu Natal). “SAB’s breweries and production lines will have to be expanded and prepared well in advance to any changes we make.”


24 November, 2004