market is defined into the next Century. AB Inbev believes that by buying SABMiller, all the stakeholders have huge benefits from the transaction. “A combination of AB InBev and SABMiller would generate significant growth opportunities from marketing the companies’ combined brand portfolio through a largely complementary distribution network, and applying the best practices of both companies across the new organization”. It gives an example of the success it has achieved in spreading the presence of Budweiser around the world, growing the brand away from its US base, currently selling more than half of Bud’s volume outside its US home market.
Chequered history Snow, Harbin, Sedrin and Fosters in Asia. But it is in Africa where SABMiller delivers the kind of brands AB Inbev needs to enter the world’s fastest growing beer market. From regional brand Castle and Castle Lite, two brands that define SABMiller in Africa, the brewer has a long list of country-leading brands - from Mosi in Zambia, Nile Special in Uganda, Kilimanjaro and Safari in Tanzania, Hansa Pilsner and Carling Black Label in South Africa, Hero in Nigeria to Super Chibuku in Zimbabwe - which is a traditional brew common in Southern African countries, to Impala – Africa’s first cassava based beer which is brewed in Mozambique. It is these regional brands that if the merger goes through, AB Inbev will leverage on as Africa’s beer AB InBev and SABMiller take more than half the industry’s profits
The acquisition of SABMiller by AB Inbev will bring to and end one of the most successful and ambitious African enterprises. Founded during the gold rush in 1896 in South Africa, SABMiller, previously South African Breweries (SAB), the company grew to be South Africa’s biggest brewer through acquisition of its competitors in the mid 1950’s – to one of the few companies that have conquered the world out of South Africa. With the fall of Apartheid in 1990, SAB broke ground on its worldwide expansion into Asia, central Europe and Africa. In 2002, the company completed the biggest deal at the time, buying the US’s second biggest beer company, Miller Brewing, changing its name to SABMiller. Further expansions into South America (Bavaria), China (Snow) and Australia (Fosters), moved SABMiller up the chain, becoming the second biggest brewer in the world. The company’s shares currently trade at both the London and Johannesburg stck exchanges, with its headquarters in London. In Africa, the company has been aggressive, and the results are there for all to see. The company has a large African footprint, especially in the countries in close proximity to its South African base. From Botswana, Mozambique, Zambia, Zimbabwe, and even way up in the continent in Uganda and Tanzania, SAB Miller is the leading brewer in these countries. In Kenya,
Nigeria, Ghana, Ethiopia and a number of African countries, though the brewer was a late entrant, it has grabbed sizable market share in beer and other beverages (through its bottling deals for Coca Cola and its bottled water business) to warrant a keen look from AB Inbev in its quest to grab the last beer frontier.
Why Africa is so special
While the SABMiller deal provides a great addition to AB Inbev in many countries around the world, the African growth opportunity has been telling in deal, considering that the African beer demand is growing at an average 5% per annum (see Graph), while Europe is largely in decline and the US – the worlds big beer market is changing towards the craft beer market, with legacy brands like Budweiser losing market share to the craft beer craze. Africa’s market remains the ‘world’s last beer frontier’ not just in sophistication but also in consumption. African beer consumers drink an average 8.8 litres per person per year, well below what other regions of the world consume. This compares quite poorly with North America (72 litres), Western Europe (55.1 litres), Latin America (53.3 litres) and Asia Pacific (18.5 litres). Even just raising Africa’s consumption to Asia Pacific’s level will more than double Africa’s beer volume. Africa’s consumption is also vastly skewed in favour of a number of countries, with South Africa (66.5 litres), already quite saturated, taking in the bulk of per capita consumption. But markets like Nigeria (12.5 litres), Ethiopia (7 litres), Uganda (11 litres) and Tanzania (9 litres), where populations are expected to balloon by 2050 offer real prospects to growth. These countries, where SABMIller is already a significant player, except Ethiopia, offer enormous and mouthwatering prospects to AB InBev. The challenge that SABMiller has continued to face in its 20 years of expansion into the Continent is the proliferation of traditional brews all over the continent, a fact that has stood on its way to improve per capita consumption. However, the company has used this fact to its advantage, growing
Buyout brings together some of Africa’s and World’s biggest brands 6
NOVEMBER 2015 | Food Business Africa
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