SAB rolls with the punches

2012-03-10 09:12

Three years ago, my colleagues and I at South African Breweries (SAB) found ourselves in a somewhat humbling position.

After four decades of operating as a sole supplier in South Africa, our long-time partner – Heineken – left us to establish its own alliance with the world’s largest spirits company, Diageo.

Not only that, but the economy had begun to slow, the cost of raw materials had just jumped and many consumers were moving to premium brands. Suddenly, we were a company in decline.
While many South Africans cheered for our company globally as we continued to expand abroad, some did not. Nobody cheers for Goliath.

But the reality was that our new “small” competitor was actually the joint venture of two of the strongest global powerhouses in the beverage industry.

For the first time in decades, we had a real fight on our hands. As our results declined, many of the pundits started to write our obituary.

But we were determined to demonstrate that a South African firm could compete and win against some of the world’s most powerful corporations. For us, South Africa is not a market on a global map. South Africa is our home, and who we are.

We had an honest conversation about what would be required to turn around our company, and win here at home. We concluded that we would have to do two things well.

First, we would have to deliver clearly superior value to consumers, retailers and society. We knew that the so-called new beer wars would not be won by thumping the competitor, but instead by delivering superior value.

Second, we knew that we would have to learn a great deal, and very quickly. Thus far in our turnaround, five lessons stand out.

The first lesson is to make reality your friend. Competition should not be bad for us; competition should be good for us.

We embraced the idea that we must move quickly from operating as a model 20th-century sole supplier and begin operating as a model 21st-century competitor.

The second lesson is that strategy must be bold. We knew that incremental improvements would be insufficient and that breaking out of our decline would require boldness in every dimension of our business.

For instance, when we realised we had been resting a bit on our reputation as one of this country’s historically most progressive companies, we decided we needed to take a bold step forward with broad-based black economic empowerment.

We didn’t want to just “tick the box” with a generic deal.

We structured the offering to involve those people who had been most instrumental in helping us build our business over the decade: the thousands of small retailers and distributors across South Africa.

Our Zenzele share scheme has been designed not only to deliver broad-based impact, but to do so quickly, paying dividends in the first year.

The third lesson is to play to your unique strengths – even if they are perceived as weaknesses.
 For instance, one of our supposedly biggest weaknesses was our dependence on our large, mainstream brands: Castle, Hansa and Carling Black Label.

With Carling in decline, we realised we had let the brand fall behind the times. The reality is that Carling has won far more prestigious international beer competitions than any other local beer.

We started communicating that champion taste boldly, and now Carling is on track to growth this year.

The fourth lesson is that simplicity is genius. Everyone loves simplicity. We knew that in 2008 when we launched our turnaround strategy, and so we have been careful to keep that strategy simple and consistent.

The final lesson is that leadership requires both head and heart. For a company to turn around in the face of adversity, it must be motivated by a just and noble cause.

For us at SAB, we are inspired by the opportunity to transform ourselves, providing South Africa with a real business success story at a point in our nation’s history when such stories are precious.

Highly aware that we cannot win by operating as a big, cold bureaucratic machine, we have put a lot of emphasis in recent years on what we call “the human touch”.

While we have benefited greatly from the lessons we have learned thus far, our learning has just begun.

We are determined to become a company that reflects exactly what South Africans can accomplish when we set our minds to it.

» This is an edited version of an address recently delivered at a Black Business Executive Circle round-table discussion

» Adami is chairman and managing director of South African Breweries Limited

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