26 Sep 2013 SABMiller’s Clark talks alcohol ad ban and beer trends
“If there’s an advertising ban, and the market goes dark, in theory the established players do better,” Clark told Business Report a few days after completing presentations to analysts and shareholders in the UK and US.
But he added that there was not sufficient experience of alcohol markets “going dark” to be confident of knowing what would happen. He said that it was difficult to draw any conclusions from what happened to cigarette sales after the ban on cigarette advertising because of the addictive nature of cigarettes.
Clark said he felt that the ANC’s attention had shifted to the upcoming elections and the advertising ban was not currently a priority for the ruling party. “It’s impossible to predict whether or not it [the interest in a ban] will revive.”
The only countries where there is a ban on alcohol advertising are India, Russia and Turkey. In Russia and Turkey alcohol consumption has dropped, but it is unclear whether this is attributable to the advertising ban or to other adverse developments in those markets.
SABMiller’s exposure to beer consumption in Russia was significantly reduced after its 2011 deal with Turkey’s Anadolu Efes, which saw it exchange its Russian and Ukrainian beer interests for a 24 percent stake in Anadolu Efes, which has beer and soft drink operations.
France also has tight restrictions on alcohol advertising.
There would still be opportunities for companies to undertake point-of-sale advertising and merchandising. “I know of no country where that is banned,” Clark said.
Retail analysts also point out that if there is a ban, alcohol producers could use the internet to get access to consumers or use surrogate products as they do in India to get exposure to a brand name.
Talking beer trends
as chief executive of the group, Clark said. “They went well, more than anything we wanted to reassure investors and analysts that our core story was on track and there will be no dramatic changes.”.
Indeed, while stressing that there would be no dramatic changes, Clark pointed out that some change would be necessary because of the ever-changing trading environment. He talked of the scope for a “revival” of beer, particularly in the more developed markets in which SABMiller operates, lending credence to the view that Clark would look to organic growth to drive the group in the coming years.
“Traditionally beer has been marketed to young males in groups, but social behaviour has changed and mixed gender drinking is more the norm, women tend to be the gatekeeper to drinking behaviour now,” said Clark, whose academic training is in clinical psychology.
“Over time there has been a shift in the way beer is perceived and in the way women think of beer; we’re not saying beer is not relevant for young males, we’re saying we need to broaden the market.”
Any “shifting” of brands would be done “over the very long term”, said Clark, who dismissed the view that “beer is beer” and frequently talked about the opportunities for “refreshing and romancing” beer and getting consumers to fall back in love with the product.
“We have to make sure we’re tracking the way consumers are evolving over time, make sure we’re staying modern, relevant and fresh.”
Clark said it was critical for SABMiller to be able to anticipate changing consumer habits and to develop brands and flavours so that it could sell premium products into those changing markets. While there is much about beer consumption that is local, Clark believes there is much to be learnt from one market to the next.
He described what sounded like the life cycle of beer consumption starting with a core lager brand, including sorghum beer in Africa, then moving to heritage or iconic brands and finally to premium brands. Consumption in every market tends to follow this pattern over extended periods of time.
“As economies grow and consumers become more affluent they tend to fragment behind brands and trade up to premium products,” Clark said.
Increasing urbanisation and modernisation of the retail sector are major influences on consumption patterns. In Europe and the US, where the beer markets are mature, there are limited prospects for growth in volume, which means the focus has to be on innovation and selling more premium products.
During his presentation to analysts in London, Clark sounded particularly pessimistic about prospects for the European market. He told Business Report a few days later: “I’m not disenchanted with Europe, I’m realistic… the environment is tough, we don’t see any signs of improvement.” He said people in Europe were going out less and drinking less when they went out.
“It is partly economic and partly lifestyle and it means we have to be more innovative with the marketing of our brands.”…
Business Report: Read the full article