SABMiller extends its global market reach

17 May 2015 - 02:02 By ANN CROTTY

SABMiller's plans to buy UK craft beer business Meantime Brewing is evidence that management does not take its global market dominance for granted. The deal, announced on Friday, will give the group exposure to products such as London Pale Ale, London Lager and Yakima Red, sold in more than 900 pubs and bars, as well as in Waitrose, Sainsbury's and Marks & Spencer stores and will help it capture some of the growth enjoyed by start-up craft producers.The acquisition includes Meantime's retail sites the Tasting Rooms and the brewery shop in Greenwich in London, and the Greenwich Union pub, Bloomberg reported.Meantime's sales by volume rose 58% last year, compared with 1% growth for overall UK beer sales, SABMiller said.SABMiller has developed innovative brands such as Peroni Chill Lemon radler (shandy), Flying Fish, Castle Lite Lime, Miller Fortune and Smith & Forge Hard Cider in an effort to counter inroads being made by craft beers across the world.story_article_left1The bulk of its massive business in the past financial year was an uninspiring performance overall, with some areas of excellence.Unfortunately for SABMiller and its shareholders, the countries in which more beer was consumed, largely developing countries, tended to have currencies that were weak against the US dollar. Because SABMiller reports in dollars, the relative performance of that currency is as important as how much more beer is sold and at what margin.The bottom line, after accounting for sales increases and currency decreases, was that SABMiller's revenue was down 1% to $22.1-billion (from $22.3-billion) and earnings before interest, tax and amortisation edged down 1% to $6.4-billion (from $6.5-billion). Adjusted earnings per share was 239.1 US cents, down 1% from 242.0 US cents in 2014.The good news for shareholders is that although the "dollar performance" was flat, the final dividend was hiked 9% to 87c (US) a share.This brings the total dividend for the year to 113c - up 8% from last year.The star performers during the year were lager in Latin America and Africa and soft drinks across the group.CEO Alan Clark said soft drinks had a "standout" year. Soft drinks now account for 21.6% of the group's total volumes, up from 20% last year.It seems that an unavoidable aspect of the group's dramatic global growth since it transferred its primary listing to London in 1999 is that its reporting has become dense and bland.Those prepared to wade through the often turgid comment will find many gems that highlight the dramas that are an inevitable part of selling so much beer across the globe.Widespread flooding in parts of Mozambique depressed demand for beer, and a controversial ban on the use of PET bottles, which can be recycled, negatively affected sales of Chibuku beer in that country. But improved marketing and a more stable political environment more than made up for these drawbacks.In Botswana, where there was no sign of a ban on PET products, a strong performance was helped by "robust growth in the 2-litre PET soft drinks pack". In South Africa, PET packs enjoyed strong growth.story_article_right2Tanzania had a weak agricultural harvest, which depressed rural consumer sentiment and contributed to a 7% decline in lager volumes.In Zambia, SABMiller had to contend with the impact of an unexpected 50% hike in excise duty during calendar 2014. This led to steep price increases, which hit demand.In Latin America, the World Cup had a varied impact. In Colombia, where games were often accompanied by violence, it had a negative effect on trading as the government decided to impose a ban on alcohol sales during matches. In Peru, the tournament helped to lift demand.In Europe, SABMiller's reversal (for beer-marketing purposes) of the 22-year old decision to break up its former Czechoslovak operation appears to have played a useful role in boosting volume growth.In the UK, sales were affected by imports by competitors of SABMiller products from the group's Polish operations.The group's share price rose 0.64% to R672.51 on Friday, helped higher by the Meantime deal...

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