Tag Archive | "SABMiller"

SABMiller packaging shows beer temperature


SABMiller-packaging-shows-beer-temperature_strict_xxlUK-based beverage company SABMiller has launched a new smart sensor technology that shows the perfect drinking temperature of beer.

Based on a colour-changing ink concept, the sensor is enclosed in a pack that accurately displays the beer’s temperature after a button is pushed.

The development is the result of a partnership between SABMiller and Germany-based Fraunhofer Institute.

The ink remains transparent at ambient temperatures and turns blue when the beer reaches the desired drinking temperature.

SABMiller global packaging manager and sensor technology creator Doug Hutt said: “The colour changing ink resonated well with consumers.

“The new smart sensor display system has taken five years to develop and is based around cutting-edge printed electronics (PE) technology, which allow the sensor, display and battery to be seamlessly integrated within packaging.”

SABMiller has patented the technology and expects to demonstrate its potential within the branded consumer goods sector over the next decade.

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Emerging Markets Drive SABMiller


SABMiller, the world’s second largest brewer, has reported an 11% increase in revenue to $31.4 billion and a 12% rise in EBITA to $5.6 billion, with underlying lager volumes up 3% to 229 million hectolitres, reflecting particularly strong growth in Latin America and Africa.

EBITA increased by 8% on an organic, constant currency basis, with all beverage divisions except for Europe contributing to growth. EBITA margin was 10 bps ahead of the prior year at 17.9%. Europe EBITA declined 9% due to lower volumes, adverse mix and increased raw material costs.

In December 2011, SABMiller completed the acquisition of Foster’s in Australia. SABMiller has also entered a strategic alliance with Castel in Africa.

In March 2012, SABMiller completed a strategic alliance with Anadolu Group and Anadolu Efes, exchanging its Russia and Ukraine beer businesses for a 24% equity stake in the enlarged Anadolu Efes group. Anadolu Efes is now the vehicle for both groups’ investments in Turkey, Russia, the CIS, Central Asia and the Middle East.

Looking ahead, Graham Mackay, chief executive of SABMiller, comments: “Trading conditions are expected to be broadly unchanged with further growth in our developing markets but no more than modest improvements in consumer spending in some more developed economies. We will continue to develop and differentiate our brand portfolios, taking opportunities to improve sales mix and raise prices selectively. Unit input costs are expected to rise in mid-single digits in constant currency terms.”

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Directorate and Senior Management Changes at SABMiller


SABMiller has announced a number of directorate and senior management changes that will all become effective from the date of this year’s annual general meeting on 26 July 2012. Meyer Kahn, who first joined the group in 1966, and who has been chairman of SABMiller since its primary listing on the London Stock Exchange in 1999, will retire as chairman after 46 years of service with the group. Graham Mackay, who joined the group in 1978 and who has been group managing director since 1997 and chief executive since 1999, will become executive chairman, with the intention that he will continue in that role for one year, before becoming non-executive chairman at the annual general meeting in 2013.

Alan Clark will succeed Graham Mackay as chief executive in 2013.

Alan Clark, currently managing director of SABMiller Europe, will be appointed as chief operating officer of the group, and as an executive director, with the intention that he will succeed Graham Mackay as chief executive at the annual general meeting in 2013. John Manser, currently the senior independent non-executive director and chairman of the audit committee, will in addition become deputy chairman of the board. Sue Clark, currently the group’s director of corporate affairs, will succeed Alan Clarke as managing director of SABMiller Europe.

SABMiller has appointed five new independent non-executive directors over the past four years, and remains committed to its policy of progressive renewal of the board and the independent directors.

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SABMiller’s Lager Volumes Decline in Europe


Global brewer SABMiller has reported a 1% organic decline in full year lager volumes in Europe as beer market growth continued to be subdued and competitors aggressively promoted economy brands and packs. Fourth quarter volumes were down 2%. The completion of planned de-stocking in the second half of the year affected Poland and Romania, which together with the effects of continuing competitor price reductions and promotional activity, resulted in volume declines of 4% and 8% respectively for the year.

In the Czech Republic, domestic volumes were in line with the prior year supported by good performance of brand and pack innovations and despite continuing weakness in the on-premise channel. In Russia, volumes were up 2%, ahead of beer market performance, and strong growth continued in Ukraine. Both Russia and Ukraine reflect 11 months of trading prior to the conclusion of the transaction with Anadolu Efes. The United Kingdom achieved volume growth of 8% for the full year, led by the expansion of Peroni Nastro Azzurro in the on-premise channel.

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SABMiller and Anadolu Efes Complete Strategic Alliance


International brewers SABMiller and Anadolu Efes have completed their strategic alliance covering Turkey, Russia, the CIS, Central Asia and the Middle East, which was originally announced last October. SABMiller has transferred its Russian and Ukrainian beer businesses to Anadolu Efes in return for a 24% shareholding to be listed on the Istanbul Stock Exchange.

The combination of SABMiller’s and Anadolu Efes’ Russian operations will create a strong number two in value share terms within the country’s beer market, with a highly attractive brand portfolio and is expected to yield significant cost synergies of at least $120 million per year, and provide additional revenue synergy opportunities.

Anadolu Efes and SABMiller will share best practice and Anadolu Efes will now develop SABMiller’s international brands in Turkey, Russia, the CIS, Central Asia and the Middle East.

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SABMiller Appoints New Group Chief Brewer


SABMiller has appointed Professor Katherine Smart (pictured) as group chief brewer to replace Professor Barry Axcell, who is retiring at the end of July 2012 after almost 35 years of service with the company. Katherine Smart, who is the current SABMiller Professor of Brewing Science and the Head of the School of Biosciencesat the Universityof Nottingham, will take up here new position on June 1st 2012.

Katherine Smart, a well-respected academic, has held this post for seven years and founded Brewing Science at the University offering research programs in malting, yeast genomics, fermentation and flavour. Barry Axcell and Katherine also developed the MSc in Brewing Science.

Katherine Smart has presented to the UK Houses of Parliament, is a scientific advisor to several global companies and has edited a number of books on Brewing Yeast. She has been awarded several awards for research including the Institute of Brewing and Distilling Cambridge Prize. She previously held the appointment of post-Doctoral research fellow at the University of Cambridge.

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SABMiller and Molson Coors Move into Fast Growing US Cider Market


SABMiller and Molson Coors, through their MillerCoors brewing joint venture in the US, have moved into the cider market, the American beer industry’s fastest-growing category. Tenth and Blake Beer Company, MillerCoors’ craft beer and import division, has acquired Crispin Cider Company, the third largest producer of cider in the US.

Crispin Cider Company produces European-style natural hard apple ciders using fermented unpasteurized fresh-pressed apple juice. The company also imports a classic English Dry Cider, Crispin Browns Lane.

SABMiller and Molson Coors formed their US joint venture, MillerCoors, in 2008. MillerCoors created Tenth and Blake Beer Company in 2010 to be a leader in the crafts and import segment.

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SABMiller’s Acquisirion of Foster’s Approved


The Australian competition authority has approved SABMiller’s acquisition of Foster’s Group, the Austrialian brewer, and the 50% of soft drinks business Pacific Beverages currently owned by Coca-Cola Amatil. SABMiller has provided certain undertakings in relation to the Foster’s acquisition including keeping management of Foster’s operations located in Australia, and not relocating any of Foster’s existing brewing facilities offshore to produce beer for Australian domestic consumption.

 

SABMiller expects to complete the A$9.9 billion (US$9.6 billion) acquisition of Foster’s Group by the end of the year. The deal is in line with SABMiller’s strategic priorities and will provide it with a leading position in the stable and profitable Australian beer industry along with the opportunity to apply SABMiller’s capabilities and scale to improve Foster’s financial and operating performance.

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SABMiller Continues Investment in Developing Markets


SABMiller is to invest a total of $555 million to expand the capacity of its subsidiaries in the developing markets of Uganda, Ghana, Zambia and Tanzania in Africa, and Peru in Latin America. SABMiller will invest $260 million in the four African countries.

 

SABMiller Africa’s impressive growth trajectory continued in the first half of the year to 30 September 2011, with volumes up 15%.  SABMiller Africa has seen growth of 34% in Castle premium beers (Castle Lager, Castle Lite and Castle Milk Stout). At the other end of the price spectrum, the company has introduced and expanded the reach of a range of affordable traditional and locally-sourced beers including Eagle sorghum beer, Chibuku opaque beer and Impala cassava beer.

 

This combination of strong underlying economic fundamentals and a full range of products at all price points has driven increased consumer demand for beer, particularly in Uganda, Zambia, Ghana and Tanzania. The newly announced $260 million investment programme is in addition to the $1.5 billion already invested in Africa in the past five years.

 

SABMiller plans a $295 million capital investment programme at its Peruvian subsidiary, Backus. Released over a three year period, the funds will be used to increase capacity in the business’ breweries in Ucayali, Cusco, Lambayeque, Lima and Arequipa.

 

Peru remains an attractive market with strong underlying economic indicators. In addition to positive GDP growth forecasts for the next ten years, the population is predicted to grow by 53% between 2000 and 2100. Beer consumption in Peru is currently more than 11m hectolitres per annum, and could rise to as much as 16m hectolitres by 2020. Per capita consumption stood at 38.2 litres per annum in 2010, which is significantly below consumption rates in Brazil (65.4 litres), Venezuela (77.8 litres) and the USA (79.8 litres).

 

SABMiller has invested approximately $570 million in Backus in the past five years, supporting its continued growth and development. Today, Backus is the second largest contributor to the Latin American division of SABMiller, which provides approximately a third of the group’s EBITA. Backus’ strong performance has continued in the first half of the current year, with beer volumes in the six months to 30 September 2011 up 11% on the prior period.

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Developing Markets Drives Sales and Earnings Growth at SABMiller


Global brewer SABMiller has increased lager volumes by 3% on an organic basis for the six months to September 30th 2011 led by robust growth in Latin America, Africa and Asia. Reported group revenue rose by 10% to $15.69 billion with organic, constant currency revenue growth of 6%. EBITA also grew by 10% to $2.70 billion, with organic, constant currency EBITA up 6%: Profit before tax, including exceptional charges of $191 million (2010: $285 million), increased by 21% to $2.04 billion.

 

While EBITA growth rose by double digits in Latin America, Africa and Asia and by single digits in South Africa, profits fell in Europe and North America by 6% in both regions.

 

“Top and bottom line growth has been strong in most of our developing market businesses, propelled by our continued investment in brands, sales and marketing capability and production capacity,” says Graham Mackay, chief executive of SABMiller. “Market conditions have remained challenging in the USA and much of Europe and increases in input costs have continued, as expected. We have taken further steps to extend our global portfolio: our planned alliance with Anadolu Efes and recommended proposal to acquire Foster’s both represent strategically important moves into attractive markets.”

 

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SABMiller Wins Foster’s


As expected, SABMiller’s sweetened bid for Foster’s has been recommended by the Australian brewer’s board. The agreed proposal represents an acquisition enterprise value of A$11.5 billion, which is a 2.8% increase on the enterprise value of A$11.2 billion implied by SABMiller’s initial proposal announced on June 21st 2011.

 

The acquisition is in line with SABMiller’s strategic priorities and will provide it with a leading position in the stable and profitable Australian beer industry along with the opportunity to apply SABMiller’s capabilities and scale to improve Foster’s financial and operating performance.

The acquisition is expected to be EPS enhancing for SABMiller in the first full year of ownership and economic returns are expected to exceed the project WACC by year 5.

 

”Foster’s will become an important part of our business, and through the application of our commercial capabilities and global scale, we expect to build on the initiatives that Foster’s management has put in place, further enhancing Foster’s performance and creating value for our shareholders,” comments on the agreement, Graham Mackay, chief executive of SABMiller.

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SABMiller Expands in China


SABMiller, through its joint venture with China Resources Enterprise, has strengthened its position within the fast growing Chinese beer market. China Resources Snow Breweries has entered into an agreement with China Kweichow Moutai Distillery Co to jointly invest in Guizhou Moutai Beer and form a joint venture called China Resources Snow Breweries (Junyi). As part of the transaction, CR Snow will inject approximately $42m in return for a 70% equity stake in the new joint venture.

 

With an annual production capacity of 1 million hectolitres, Moutai Beer is a popular brand with a strong competitive position in Guizhou Province. CR Snow already has a leading position in Guizhou Province, with a market share of approximately 50% and sales volume of over 1.8 million hectolitres in 2010. Since its entry into the Guizhou market in 2007, CR Snow’s sales volumes have grown at 40% per year, making Snow the most prominent brand in the province.

 

The brewing industry in Guizhou Province has been growing rapidly in recent years, with the overall sales volume in 2010 increasing by 10% year-on-year to 3.9 million hectoliters.

 

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Foster’s Board Rejects SABMiller’s Hostile Offer


The board of Foster’s intends to advise shareholders to reject SABMiller’s proposed offer of A$4.90 per share in cash. Indeed, the board has reiterates its belief that the offer, at the same price as SABMiller’s initial offer made in June, significantly undervalues Foster’s.

 

Foster’s beer portfolio includes Australian icons such as VB, Cascade, Crown Lager, Carlton Draught and successful imports Asahi,Coronaand StellaArtois. Through its Carlton United Brewers business, Foster’s isAustralia’s largest brewer, controlling about half of the beer market.

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SABMiller Makes Hostile Bid For Foster’s


SABMiller has made a hostile move to acquire Foster’s after its initial offer was rejected by the Australian brewer’s board. SABMiller first approached Foster’s on June 20th 2011 with a confidential acquisition proposal of A$4.90 per share in cash, valuing Foster’s at A$11.2b (Eur8.1b).

 

As there has been no willingness to engage in relation to SABMiller’s proposal on the part of the Foster’s board, SABMiller has now decided to make the same offer directly to Foster’s shareholders.

 

Detailed information in relation to the offer will be set out in a Bidder’s Statement to be lodged with the Australian Securities and Investments Commission and provided to Foster’s.and the Australian Securities Exchange shortly. SABMiller expects to mail the Bidder’s Statement to Foster’s shareholders approximately two weeks after it is provided to Foster’s.

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SABMiller to Renew Foster’s Bid


SABMiller is reported to be planning to renew its efforts to acquire Australian brewer Foster’s. Foster’s is due to report a major fall in brewing profits when it announces its full year results on August 23rd, leading to a further decline in its share price.

 

SABMiller made its initial offer of A$11.2b (Eur8.1b) in June but with no rival bid emerging, the Austalian brewer’s share price has been tumbling, making SABMiller’s bid increasingly attractive. SABMiller is expected to increase the pressure on the Foster’s board to open talks on its current bid or a slightly increased one.

 

According to Reuters, analysts initially expected that SABMiller would have to pay up to A$5.20-A$5.40 a share to succeed, but now believe that A$4.90-5.10 would be sufficient.

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Heineken Starts Amstel Brewing in Russia


Heineken has commenced the brewing of its Amstel brand at its St Petersburg brewery in Russia. Heineken is reported to be aiming to capture a 1% share of the Russian beer market for Amstel by the end of the year as consumer demand for premium beer brands, such as Heineken and Zlaty Bazant, recovers.

During the past decade the Russian beer market has expanded by more than 40% and is now the fourth largest in the world. However, a 200% increase in beer tax imposed by the Russian Government in 2010 dampened demand.

Five brewers – Baltika Breweries, SUN InBev, Heineken, Efes and SABMiller – control over 80% of the Russian beer market. Calsberg’s Baltika Breweries is the clear market leader with a 40% share.

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Foster’s Rejects A$11.2b SABMiller Approach


Foster’s Group, the largest brewer in Australia, has rejected an unsolicited A$11.2b (Eur8.3b) acquisition approach from SABMiller. The proposal to acquire Foster’s is in line with SABMiller’s strategy to create an attractive global spread of businesses, with a focus on developing strong and successful brand portfolios.

Australia has a strong, wealthy and growing economy with consistent long term population growth in key demographics, and is well positioned to benefit from continued economic growth in Asia. Australia has a profitable beer market in which Foster’s is the leading brewer with 7 of the top 10 beer brands, a national distribution platform and scale production.

The proposed price of A$4.90 a share in cash represents an enterprise value for Foster’s of A$11.2b and a forecast EV/EBITDA multiple of 12.5 times. However, the board of Foster’s believes that the proposal significantly undervalues the company.

“SABMiller has a proven track record of acquiring and integrating brewing companies in a way which benefits shareholders, employees, business partners and the broader community,” says Graham Mackay, chief executive of SABMiller. “We continue to believe that the proposal price is attractive and offers good value to Foster’s shareholders. SABMiller can conclude a transaction quickly and will continue to seek engagement with the board of Foster’s to put an agreed proposal to Foster’s shareholders.”

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Sales and Profits Fall at Plzensky Prazdrof


An increase in the excise duty on beer and adverse economic conditions in its domestic market have hit sales and profits at Plzensky Prazdrof, the Czech brewer which produces the famous Pilsner Urquell brand. Revenue decreased by 5.5% to CZK14.559b (Eur ) and profit before tax dropped 10.8% to CZK4.180b for the year ended March 31st 2011.

“Over the last two years, challenging market conditions have significantly influenced the whole Czech beer market. One of key adverse influences was beer excise tax increase during the difficult economic conditions. This measure did not meet government expectations at all and adversely impacted the brewing industry’s ability to develop and invest,” says  Doug Brodman, managing director of Plzensky Prazdroj. “These market conditions have reflected in our results for the year, however, we have continued to invest not only into our breweries and brands but also to the development of communities where we operate.”

With total sales of over 9.9m hectolitres in the calendar year 2010 (including licensed production abroad) and exports to more than 50 countries around the world, Plzensky Prazdro is the largest exporter of Czech beer. Plzensky Prazdroj is part of global brewer SABMiller. Indeed, Pilsner Urquell is the international flagship of the SABMiller brand portfolio.

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Diageo and SABMiller End Brewing and Distribution Agreement


Diageo, through its subsidiary East African Breweries, has agreed to purchase SABMiller’s 20% shareholding in Kenya Breweries for $225m. The deal is subject to EAB disposing of its 20% shareholding in Tanzania Breweries, which is majority owned by SABMiller, through a public offer.

The two deals effectively end a brewing and distribution agreement between Diageo and SABMiller in Kenya and Tanzania which dates back to 2002.

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Solid Performance By SABMiller


Global brewer SABMiller has reported a 7% rise in group revenue to $28.3b, with organic, constant currency group revenue growth of 5% for the twelve to March 31st 2011. Lager volumes of 218m hectolitres were 2% ahead of the prior year on an organic basis with particularly good growth in Africa, South Africa and Asia.

Reported EBITA rose 15% to $5.04b, with organic, constant currency EBITA growth of 12%: Organic EBITA growth was 11% in Latin America, 20% in Africa, 33% in Asia and 11% in South Africa. Disciplined revenue management, synergies and cost savings helped to increase North American organic EBITA by 20%.

In Europe, EBITA increased by 2% (4% on a constant currency basis) to $887m, despite lager volumes falling by 3% for the year amid difficult economic and industry conditions, including competitor discounting. The first half of the year was particularly challenging as a result of significant excise increases in Russia and the Czech Republic as well as extensive flooding and the mourning period following the death of the president in Poland. The second half of the year saw improving volume trends across most markets, albeit compared to a relatively weak prior year base. While lower volumes and down trading impacted profitability, lower raw material costs and cost efficiencies more than offset this, driving the increase in EBITA.

Miller Brands, SABMiller’s UK business, increased lager volumes by 23% during the year. All brands in the UK portfolio recorded double digit growth, with Peroni Nastro Azzurro continuing its strong performance, growing volume 21% – in the context of a premium lager sector which grew only marginally. Launched in 2005 Miller Brands has responsibility for the development of SABMiller’s international premium brands across the UK and Ireland; these include Peroni Nastro Azzurro, Pilsner Urquell and Miller Genuine Draft.

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SABMiller Opens New £3 Million Research Brewery in the UK


SABMiller today announces that it has commissioned a £3 million global brewing research facility in Nottingham, with the aim of pioneering new developments in the science of brewing.  Housed within the University of Nottingham’s School of Biosciences, the Brewing Research Facility (BRF) will explore new brewing technology and processes, putting the UK at the centre of SABMiller’s global research programme.

The research is intended to lead to advances in the sustainability and resource efficiency of beer production, and could contribute to the development of significant consumer benefits, such as enhanced shelf life. Professor Katherine Smart, the University of Nottingham SABMiller Chair of Brewing Science, will also be based at the facility, where she and her team will focus on process innovation and novel uses of brewing by-products.

“Whilst the recession is leading some businesses to withdraw funding into research and development, our belief is that it is more critical than ever to invest. Significant improvements in water and energy efficiency will only be achieved if we continue to commit resource and capital to driving the necessary degree of change,” comments Graham Mackay, chief executive of SABMiller.

In 2008 SABMiller set an industry leading target to reduce its water use per litre of beer by 25% by 2015; and in 2009 announced that by 2020 it will reduce fossil fuel emissions from its beers by 50% per litre of beer produced.

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Board Changes at SABMiller


Malcolm Wyman, chief financial officer of SABMiller, has confirmed his intention to retire from the company at the end of August 2011, and will stand down from the board on July 21st 2011. He will be replaced by James Wilson, currently finance director for SABMiller Europe.

James Wilson joined SABMiller in 2005 and has held a number of senior positions in the group, including senior vice president, market development and strategy, Miller Brewing Company, USA; managing director of SABMiller Russia; and managing director for SABMiller’s Central European businesses. James Wilson becomes deputy chief financial officer of SABMiller with immediate effect, but he will retain his responsibilities as finance director for SABMiller Europe until his replacement is appointed.

Malcolm Wyman.

Malcolm Wyman leaves SABMiller after 25 years of service. He first joined South African Breweries Ltd in 1986, after a successful career in investment banking in South Africa, and was appointed to the board as group corporate finance director in 1990. He transferred onto the board of South African Breweries plc upon its listing on the London Stock Exchange in 1999, and became chief financial officer in 2001 with responsibility for the group’s finance operations, corporate finance and development, and group strategy. Following his retirement, Malcolm Wyman will continue through a consulting arrangement with SABMiller, to provide advice and support to the company.

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SABMiller’s Lager Volumes Down in Europe


Global brewer SABMiller has reported that its lager volume in Europe declined by 3% in the 12 months to March 31st 2010, reflecting a particularly challenging first half impacted by generally weak economic conditions. Fourth quarter volumes were up 2% benefiting from a weak comparative period due to prior year excise increases in Russia and the Czech Republic.

Poland’s volumes were down 4% for the year with the market impacted by widespread flooding and alcohol sales restrictions during a nine day national mourning period in the first half, as well as significant competitor discounting in the economy segment. In the Czech Republic SABMiller’s volumes were down 6% due to continued weakness in the on-premise channel, further downtrading into lower value segments and increased competitor discounting.

Russia’s full year volumes were 1% ahead of the prior year as a result of a stronger second half supported by a gradual economic recovery, and despite competitor price reductions in the local premium segment. In the fourth quarter Russia’s volumes grew by 17% reflecting lower volumes in the fourth quarter of the previous year following significant buy-in ahead of the January 2010 excise increase.

Volumes in Romania were down 8% as the market remained in recession and continued to be impacted by government austerity measures.

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Brewery Expansion by SABMiller


SABMiller is investing an additional $15m in its operations in South Sudan to increase production capacity and build on the strong performance of its local brand portfolio. The state-of-the-art brewery in Juba, which was commissioned in 2009 following investment of $37m, is currently at full capacity.

By November 2011, the brewery will have increased brewing capacity to a total of 500,000 hectolitres. The investment comes in response to very positive consumer acceptance of the brewery’s local brands in its first two years of operation and will enable SABMiller to service the entire South Sudanese market with a balanced and affordable portfolio of brands.

The popularity of the newly-launched White Bull brand and the locally brewed and bottled Nile Special brand has driven the increase in production capability. However, improved capacity will also give the company the flexibility to introduce new brands to the market.

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SABMiller to Build New $100 Million Brewery


SABMiller will invest over $100m in building a new greenfield brewery in Onitsha, in South Eastern Nigeria. The Anambra State Government and other Nigerian investors will hold up to 20% of the shares in the new business.

On completion the brewery, which is expected to produce Grand Lager, Eagle, and Castle Milk Stout among other brands, will have the capacity to produce 500 000 hectolitres of beer and malt beverage with the capability to bottle water and other beverages.

SABMiller is one of the world’s largest brewers with brewing interests and distribution agreements across six continents. The group’s wide portfolio of brands includes premium international beers such as Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft and Grolsch, as well as leading local brands such as Aguila, Castle, Miller Lite, Snow and Tyskie. SABMiller is also one of the world’s largest bottlers of Coca-Cola products.

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Ten Brewers Control 61% of Global Beer Market


Worldwide beer consumption has increased by over 3% per annum during the last ten years and the top ten brewers now account for over 60% of global beer volume, compared to 38% in 2000. A new report by Rabobank titled ‘Value creation in the Beer Sector through M&A activities’ looks at changes in the beer sector in the last decade. Following consolidation, four leading global brewers have emerged. These four beer companies – AB InBev, SABMiller, Heineken and Carlsberg – have tripled their combined market share since 2000 and have almost quadrupled their volumes.

Most of the rise in worldwide beer consumption has come from rapid growth in Asia, Eastern Europe, South America and Africa, while volume growth in developed markets was negligible. “The major brewers reacted to these changes by entering emerging markets and consolidating in developed markets. This has radically altered the competitive landscape,” says Francois Sonneville, a food & agribusiness analyst at Rabobank. “The most striking change is the emergence of a top-four.”

Do Acquisitions Add Value?

According to Francois Sonneville the strategies of the top-four are similar. By making acquisitions they seek to grow their volumes to benefit from economies of scale. “The advantages of scale have led to improved profitability and the margin development of the top-four has been better than the rest of the market,” he says.

But many brewers outside the top-four are not convinced that acquisitions can add value at today’s prices. Francois Sonneville explains: “Over time, acquisitions have become more expensive. So brewers find it difficult to decide the best course to add value to their business in an increasingly aggressive environment.” Ignoring the developments however is not an option. As the chief executive of one market leader says in the Rabobank report: “You’re either at the table or on the menu.”

The Rabobank analyst acknowledges that the traditional method of comparing the return on capital employed (ROCE) to the weighted average cost of capital (WACC) is ideal for predicting value creation, but difficult to use for evaluation purposes. Therefore, a second method, devised specifically for this report, compares the top-four with a constructed peer group of 20 listed major brewers.

The conclusion is that there is no justification for brewers to disregard acquisitions in general for fear of destroying value. A comparison of developments in return on capital employed shows that the acquisition strategy of the top-four brewers not only improved margins, but also led ultimately to value creation. Francois Sonneville continues: “Despite initial pressure on the ROCE from M&A activity, the top-four have managed to outperform the peer group in the long run. So these four have found it better to be at the table than on the menu.”

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SABMiller Reveals Europe’s Most Popular Beer Drinking Destination


Prague, Amsterdam and Berlin have been named the top European destinations for a beer, according to a new report into European beer drinking culture by SABMiller, one of the world’s largest brewers.

The report, ‘Whose Round?’ which was researched across 12 European countries, found that 20% of all respondents named Prague as their top city for a beer, although British participants chose London, followed by Dublin, as their beer-drinking destination of choice.

Prague was chosen as the top city by respondents from five countries and was particularly popular with beer drinkers from its Eastern European neighbours. Second placed Amsterdam trailed with 13% of the vote. London was fifth overall, proving most popular with Romanian, Czech and Dutch drinkers – as well as Brits.

As well as the British; Dutch, Germans and French beer drinkers all showed their national pride by voting their own capital the top place for a pint. Propping up the bottom of the league table were Bucharest, Bratislava and Warsaw, landing only 1% of the vote each.

Nigel Fairbrass from SABMiller says: “It is no great surprise that Prague is the most sought-after city for Europeans to enjoy a pint; the Czech Republic produces some of the world’s finest beers and is home of the original Pilsner, Pilsner Urquell. Equally it’s interesting to note that Brits don’t think London can be beaten when it comes to beer.”

‘Your Round?’ surveyed a range of beer drinking cultural trends across Europe, including which countries are most likely to socialise after work – and which have the most generous bosses; which nation of men are most likely to expect a woman to pay her way on a date; and the celebrities that Europeans would most like to go for a beer with.

Great Britain, Romania and Italy have the most generous bosses when it comes to buying beer. The Dutch are the least likely to go out drinking with colleagues (34%) but when they do, they have the most generous bosses, with 37% saying that their boss will sometimes or always stand a round.

Brits’ choice of celebrity beer drinking buddies were Cheryl Cole and Stephen Fry, whilst Barack Obama and Angelina Jolie were the most popular across Europe.

Other findings include:

– Britain is the biggest round-buying nation, with 82% of people saying that they buy beer in rounds – three times more than in Germany, where drinkers prefer to pay for their own drinks individually

– British bosses are amongst the most sociable in Europe – and the most generous, whereas French bosses are the least likely to ever go out for a beer with their teams

– British women are big believers in equality – more than half think that men and women should split the beer tab on a date.

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SABMiller Enters Argentinean Beer Market


SABMiller, one of the world’s largest brewers, has acquired Cerveceria Argentina SA Isenbeck (CASA Isenbeck), the third largest brewer in Argentina, from the Warsteiner Group. CASA Isenbeck’s principal brands are Isenbeck and Warsteiner, with total sales volumes in 2009 of approximately 600,000hl.

Its brewery is located in Zarate, near Buenos Aires, and has a total capacity of 1.2 million hl. CASA Isenbeck will continue to produce and distribute the Warsteiner brand under a long-term licence agreement. CASA Isenbeck has gross assets of $24.7m.

“We are pleased to have added CASA Isenbeck to our Latin American footprint, giving us exposure to the fast-growing and attractive Argentinean beer market and complementing our existing Latin American operations,” comments Barry Smith, president of SABMiller Latin America.

SABMiller’s wide portfolio of brands includes premium international beers such as Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft and Grolsch, as well as leading local brands such as Aguila, Castle, Miller Lite, Snow and Tyskie. SABMiller is also one of the world’s largest bottlers of Coca-Cola products.

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Global Spread and Big Brands Drive Profit at SABMiller


SABMiller, one of the world’s leading brewers with operations and distribution across six continents, has increased reported EBITA by 13% to $2.47b for the six months to September 30th 2010. The growth was 10% on an organic, constant currency basis, as key operating currencies strengthened against the US dollar compared to the equivalent period in the prior year. Profit before tax advanced 13% to $1.69b, including exceptional charges of $285m.

Reported group revenue increased by 7% (4% on an organic, constant currency basis) to $14.24b, benefiting from higher sales volumes and price increases mainly taken in the second half of the prior year. Lager volumes increased 1% on an organic basis with growth in Asia, Africa and South Africa

Graham Mackay, chief executive of SABMiller.

However, in Europe EBITA fell by 4% on an organic, constant currency basis due to volume decline and down-trading. North America EBITA grew 27% as firm pricing and synergies more than offset volume declines.

“In trading conditions which remained mixed across our markets, the group benefited from its global spread of businesses, delivering a strong financial performance. The strength of our brands, which supported price increases taken largely in the prior year, contributed to good revenue growth,” explains Graham Mackay, chief executive of SABMiller. “Cost reductions, driven by lower raw material input costs and further fixed cost efficiencies, helped to finance increased investment behind our brand portfolios and assisted margin enhancement.”

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Foster’s Turns Down Offer for Wine Business


Foster’s, the Australian brewer and wine maker, is reported to have rejected a cash offer of up to A$2.7b (£1.6b) from an unidentified international private equity firm for its troubled, global wine business, which it plans to demerge. The offer was spurned as undervaluing the wine business, which analysts have valued at more than A$3b.

However, the move could well spark the start of a bidding war for the wine arm or for the entire Foster’s business, which has a market capitalisation of almost A$12b.

Foster’s has renamed its wine business as Treasury Wine Estates in advance of the planned demerger next year. With 12,000 hectares of vineyards, 20 wineries and 50 wine brands, including Penfolds, Lindemans, Wolf Blass, Rosemount, Stags’ Leap, Wynn, Beringer and Castello di Gabbiano, Treasury Wine Estates is the second largest wine producer in the world and incorporates some of the most popular and collected wines from Australia, California, France, Italy and New Zealand.

SABMiller, the world’s second biggest brewer, is reported to be considering launching a £7b bid for Carlton & United Brewers, Foster’s beer operation. A successful bid by SABMiller would make it the biggest brewer in Australia and strengthen its standing in the Pacific region. Japanese brewer Asahi is also believed to be interested in Foster’s beer business.

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SABMiller Interested in Foster’s


SABMiller, the world’s second biggest brewer, is reported to be considering launching a £7b bid for the beer business of Foster’s, the Australian brewer and wine producer. Carlton & United Brewers, Foster’s beer operation, produces Victoria Bitter and Foster’s lager.

A successful bid by SABMiller would make it the biggest brewer in Australia and strengthen its standing in the Pacific region. Japanese brewer Asahi is also believed to be interested in the Foster’s beer business.

Foster’s announced in May that it was going to spin-off its struggling wine business.

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SABMiller Calls For Greater Environmental and Social Disclosure


SABMiller, the world’s second largest beer company, is calling on the brewing industry to improve disclosure on environmental and social impacts. The company is taking a lead by publishing detailed information about the impacts of its own operations around the world, in an online format which allows for greater insight and scrutiny into the country-level performance of its businesses.

In just a few clicks, any visitor to www.sabmiller.com can see which businesses are performing well but also where improvement is needed across SABMiller’s ten sustainable development priorities; from improving water efficiency and reducing greenhouse gas emissions, through to discouraging irresponsible drinking and contributing to the reduction of HIV/Aids.

Andy Wales, SABMiller’s global head of sustainable development, says: “Transparency underpins our approach to sustainable development and our wider business activity. We cannot simply celebrate the success stories; we also need to be honest about areas of weakness. This interactive tool lets consumers, employees, partners and communities see how we are doing in those areas which matter most to them.”

SABMiller has developed the Sustainability Assessment Matrix (SAM) to monitor progress against each of its ten sustainable development priorities. To achieve each performance level, a business must meet a series of assessment criteria which includes both quantitative and qualitative measurements.

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SABMiller Unveils Low-energy Boiling Technology


SABMiller’s global brewing technical team has developed innovative technology which dramatically reduces the energy input required in the boiling process within its breweries. The new technology, which will be introduced across a number of SABMiller’s operations in the coming year, can dramatically cut the energy required at the point the unfermented ‘wort’ is heated to ensure product and microbial stability.

In a typical brewery the energy used in boiling can account for up to 40% of the facility’s total energy requirements, so the new technology has the potential to significantly reduce both fuel costs and the carbon emissions from the use of coal or oil-based boilers.

SABMiller has committed to reduce its fossil fuel emissions by 50% per litre of beer by 2020 and its water use by 25% per litre of beer by 2015, compared to 2008 levels. Innovations such as low-energy boiling will help the company take a significant step towards those goals.

“Elements of the brewing process have remained largely unchanged for many years. However, by applying new scientific techniques we are able to produce the same high quality products our consumers demand using less energy, which is good for us and good for the environment,” points out Professor Barry Axcell, group chief brewer for SABMiller.

The new technology, the precise details of which will remain confidential, has been in development for several years, with testing starting out in laboratories before graduating to full-scale trials.

Following extensive testing the new technology has already been installed in both South Africa and parts of Africa, with long term plans to roll it out globally.

SABMiller has brewing interests and distribution agreements across six continents. The group’s wide portfolio of brands includes premium international beers such as Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft and Grolsch, as well as leading local brands such as Aguila, Castle, Miller Lite, Snow and Tyskie. SABMiller is also one of the world’s largest bottlers of Coca-Cola products.

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