Cheers to SAB's battling boykie

Outgoing breweries boss won't slate the government's failures in public, he says

Meyer Kahn, the outgoing chairman of South Africa's most successful multinational company, SABMiller, says the current situation of corruption, poor governance and crime in the country is not sustainable.

At the same time, publicly picking fights with the government is not the SABMiller way, he says.

His remark comes in the wake of Nedbank chairman Reuel Khoza's much-publicised criticism of the government, and his vicious mauling by the ANC and government in return.

SABMiller talks to the government "continuously", says Kahn. "Little do you know how often we meet with important role players to express our views. But it's not always in the public arena because that doesn't make sense."

He agrees that the results may not be immediately apparent.

"But there is movement. There is a major recognition that criminal violence is killing this country. There is a massive recognition that corruption at all levels is totally unacceptable. And that's a start."

Blunt, combative and unpretentious, Kahn, the "boykie from Brits" who turns 73 in June, studied law, joined SAB in 1966, became a director in 1981, MD in 1983, executive chairman in 1990 and (non-executive) chairman of SAB plc in 1999 when it moved its primary listing to London.

Most of its top executives went there too, but not Kahn.

"Probably for very selfish reasons. First of all, I'm as African as anybody."

And with 70% of SAB's earnings still coming from South Africa, "I was actually looking after more of the business in the formative years of our listing in London than [CEO] Graham [Mackay] was."

Thirteen years later, revenue from South Africa is about 22%, with just under 30% from Africa as a whole.

Kahn led the team that devised the company's hugely successful international strategy, which has seen it acquire 200 brands in 80 countries on six continents.

Almost every one of the top executives running this $70-billion global empire is South African.

"The fact of the matter is SA is where we were born and bred and learned the business. SA has developed managers over a long period of time that can compare [to] the best in world."

He credits the unique challenges they've had to overcome.

"If you look back at the times when we had sanctions against us, high rates of inflation, government hostility, political violence, labour unrest, strikes, you name it, that actually strengthened the management resolve in SA. Those genes that translated into the SAB way are culturally very much part of SAB and SABMiller today."

One wonders if its success owes less to superior genes than its ability to bring more resources into play than its rivals.

"No. Our competitors worldwide are formidable, to say the very least, and they have enormous resources.

"When we started we were the outsiders, we were the tiny ones. These colonials cheekily coming in to the rest of the world. And they were the big guns in the marketplace. Now we're one of the major big guns, the second biggest in the world."

So is SABMiller just better than the rest?

"I don't think we're better. I certainly think our culture is probably a bit different. We have a view that business is like a wheelbarrow. You stop pushing it, it's going to stand still. So we never stop pushing."

Under apartheid, SAB enjoyed an effective monopoly over the local beer market. Critics say a big part of the much-vaunted "SAB way" was bullying would-be competitors into oblivion.

"That's not true. What we did do was we made beer affordable to the masses and they chose our brands. So don't blame us for having that large market share. We didn't buy it, we earned it."

Price cutting is easy when you have a 90%-plus dominance of the market, and devastating for smaller competitors.

"We were not born dominant. We were born tiny and we grew our business."

Would such dominance have been possible under today's competition regime?

"Probably, yes. And the reason is we didn't buy breweries, people voted for our beers. If you make the best beers in the world, and your distribution system is superb, and you introduce returnable bottles which reduces the price of beer by almost 40%, and increase the price by much less than the inflation rate - are you saying that's bad for the consumer?"

SAB was accused of using ruthless tactics to squeeze competitors out of the distribution channels.

"How can you say that? Just look at the competitors that I faced in my day. The Rupert organisation is the finest marketing organisation in the world, they are brilliant at whatever they do. They competed against us in beer. And they were more part of the political setup than we ever were as the English Hoggenheimers. We won the beer war, so called, because more consumers voted for us than they did for the competitor."

In 1997 Kahn was seconded to the SA Police Service for two years and stayed two-and- a-half years.

Crime didn't go down, but he counts it a success.

"I wasn't brought in there to fight crime."

His job was to integrate 11 different police forces, each with different ranks, standing orders, bylaws, levels of technical ability and so on, into one.

"It was probably the biggest single commercial merger in the history of the world; 185000 people had to be brought in under one roof."

His job was also to introduce a culture of professionalism.

If he did it so well, why did things fall apart after he left?

"Well, just look at the leadership that they imposed on the police.

"Let me say something about some of the appointments being made currently in our country. In corporate life and generally throughout the world, people climb the tree from the bottom up. By the time you get to the top of the tree you've learned a lot about your limits of power and how to manage people. Political appointments carry huge danger. We've now had two instances of people coming in at the top of the tree and landing up right at the bottom. It looks like we may be getting a third."

Why did SABMiller shun UK corporate governance codes by announcing that Mackay would become chairman and continue as CEO for a year?

"We didn't."

But the code says the CEO shouldn't become chairman of the same company and the roles shouldn't be combined?

"The code goes on to say, 'comply or explain why you are not complying, because we recognise that one size does not fit all'. We have explained very, very vividly to everybody, and most of them have accepted it."

No matter what happens, SABMiller will "never, ever" leave South Africa, he vows.

"You never give up the good fight. What we need to do is to push the wheelbarrow in South Africa as hard as we push it in SABMiller."