AB InBev set to spur growth of beer brands

Anheuser-Busch InBev (AB InBev) is looking to bring its Budweiser, Stella Artois and Corona beer brands to the local market and the rest of Africa.

In October, AB InBev bought SABMiller for more than $100 billion (R1.3 trillion) to create the world’s largest beer maker.

One of its primary reasons for concluding the deal was to gain a foothold in the African market.

Ricardo Tadeu, president of the new Africa zone in AB InBev, told City Press that the company was looking to invest in two new production lines in South Africa at an estimated cost of between $100 million and $140 million.

However, Bloomberg quoted Tadeu as saying that AB InBev could make an investment of $150 million and $200 million in the two new South African production lines.

Tadeu said the number of local jobs to be created was not yet known. He said AB InBev was planning a new plant in Nigeria.

The last investment that SABMiller made in terms of new capacity in South Africa was in 2008, he added.

With regard to the rest of Africa, AB InBev was focusing on organic growth.

“Africa is the place to be,” said Tadeu.

The company currently has operations in 14 African countries and has a presence in a total of 40 African countries.

Tadeu said AB InBev was looking to produce Budweiser and Stella Artois at its local plants.

The company also wanted to introduce low- or no-alcohol products to the local market.

Tadeu said Budweiser had no presence in the local market, but before it had acquired SABMiller, an importer had brought Stella Artois and Corona to the country.

At present, the local market share of Stella Artois and Corona amounts to less than 1%.

Tadeu said he would like to see the exports of AB InBev beer brands from Africa to other markets reach the 1 million hectolitre mark within 10 years.

On the other hand, AB InBev exports 50 million hectolitres a year of Corona, which is a Mexican beer.

Tadeu said he would like to export eight AB InBev African beers – including Castle Lite, Kilimanjaro of Tanzania and Nigeria’s Hero beer – to the US, China, the UK and Australia.

The immediate focus for AB InBev, though, was on South Africa.

“South Africa is the market that is the most developed in Africa,” Tadeu said.

Beer consumption on the African continent was considerably smaller than in other parts of the world, he added.

In South America, annual beer consumption per capita was between 55 and 65 litres, while in most African countries, annual beer consumption per capita was between nine and 11 litres.

In comparison, the annual beer consumption per capita in Malawi amounted to three litres.

After completing its acquisition of SABMiller, AB InBev embarked on a voluntary retrenchment programme, which resulted in 370 employees accepting packages.

Tadeu could not comment on how much it cost the company to retrench staff, but said the reason for the voluntary retrenchment programme was that AB InBev’s operating model was different from that of SABMiller, and there were overlaps between the AB InBev headquarters and the Joburg offices.

He said AB InBev wanted more people in the field and at depots rather than at company headquarters.

“There had to be adjustments,” Tadeu said.

Regarding the recent Cabinet reshuffle here and South Africa being downgraded to “junk” status by two major ratings agencies, Tadeu said AB InBev did not comment on political events.

He reiterated that the company was committed to South Africa and Africa as a whole, and was confident about its long-term future over the next 20 to 30 years.

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