SABMiller’s Lager Volumes Grow In Africa

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VENTURES AFRICA – SABMiller’s lager volumes in Africa gained 4 percent on an organic basis in the third quarter to December last year as most markets continued to grow strongly, the world’s second biggest brewer said in its trading update on Tuesday.

It said Zambia experienced lager growth of 10 percent as the market continued to benefit from improved availability and distribution networks, further supported by the operation of the new brew house at Ndola from November 2012. Uganda returned to growth this quarter with lager volumes up 4 percent despite a slower economy. In Mozambique the affordable and mainstream segments continued to perform well helping deliver lager volume growth of 9 percent.

In Ghana, volumes grew by 9 percent driven by a strong performance by the Club brand while South Sudan continued to grow strongly. But Tanzania’s volumes continued to decline, slipping 13 percent for the quarter due to the country’s excise related pricing. And lager volume growth moderated to 5 percent in Zimbabwe following a price increase taken in the quarter as a result of an unanticipated excise increase. “Our associate Castel delivered lager volume growth of 5 percent on a pro forma basis including the combined Angola business. Soft drinks grew by 12 percent on an organic basis assisted by strong performances in Nigeria, Zambia and Ghana,” Richard Farnsworth, the business relations manager at SABMiller said.

In South Africa, lager volumes grew by 3 percent despite a challenging economic and trading environment. In the face of strong competition, the mainstream brand portfolio grew in aggregate with Castle Lager performing particularly well.

Castle Lite, SABMiller’s principal premium offering, continued its strong performance with more than 20 percent growth. Targeted brand investments as well as improved retail execution and customer service continued to have a positive impact in South Africa. Soft drinks volumes declined by 3 percent following a price increase on some packs in November 2012 partially offset by growth in still drinks.

SABMiller unveiled its latest trading results on Tuesday after announcing that its subsidiary Cerveceria Nacional would sell its Panama-based milk and juice division. The business will be sold for a cash consideration of $86 million to narrow the focus of the company. The drinks company’s last results showed strong revenue and earnings growth in the first half. Reported group revenue was up 11 percent for the six months to September 30th, SABMiller said last November.

While its Peroni brand has been performing well, the group has been hit by a decline in the UK beer market and a rise in alcohol prices. SABMiller released independent research commissioned from the Centre for Economics and Business Research last month which revealed that a 45p minimum unit price for alcohol would hit drinkers in low-income families.

“Minimum pricing is a poor piece of policy that will do little to address the damage caused by alcohol misuse and much to exacerbate the financial challenge facing moderate drinkers on lower incomes,” said SABMiller’s Senior Vice President of Industry Affairs, Mike Short.