09 Mar 2015 SABMiller’s confidence in Africa

At an investor seminar in London today, Mark Bowman, MD SABMiller Africa, will underline his confidence in the strong long-term growth potential for beer on the continent, and set out why he believes SABMiller is best-placed to capture this opportunity.

Bowman says: “Africans drink nine litres of beer per head per year, compared with a global average of 45. So as Africa develops and levels of disposable income increase we expect the rate of beer consumption to grow significantly. Additionally, we anticipate strong GDP growth in Africa which supports our optimism.

“Consumer access to affordable, formal alcohol and developing brands that tap into local pride and unlock the aspirations of the growing middle class who are seeking more premium brands will be the key drivers of top-line growth for our business across Africa.

“The informal market continues to dwarf formal alcohol in Africa. While homemade or illicit alcohol poses a potential health risk to consumers, it is considerably cheaper, so our challenge is to ensure that we provide price-sensitive consumers with affordable, high-quality alternatives.

“African alcohol consumption, including formal and informal alcohol, is in line with the global average at 6.2 LPA (litres of pure alcohol) per person per year. The potential for growth by bringing consumers into the formal alcohol market is substantial.

“By developing new affordable brands, such as Chibuku Super and Impala (the world’s first commercial cassava beer in Mozambique), and maintaining moderate pricing regimes on our beer brands, SABMiller expects to win share from the informal alcohol market and achieve significant long-term volume and NPR growth in Africa.”

Seminar webcast:

Jon Kirby, CFO SABMiller Africa, will also present alongside Bowman at the seminar. The event webcast can be accessed on www.sabmiller.com along with the slides from the presentation.

Highlights from the presentation:

The Africa growth fundamentals are compelling. Expectations for 2015 are:
• +2.6% population growth
• +5.4% GDP / capita growth
• +4.3% increase in urbanisation

Drive top-line growth based on understanding local consumer needs
1. Increasing access to formal alcoholic beverages
• African alcohol consumption per capita is in-line with the global average at 6.2 LPA
• 90% of alcohol consumed in Africa is non-beer and >80% of this is informal
• Bringing consumers into formal alcohol is a significant opportunity, which we will meet through the development of affordable brands and price discipline across our core brand portfolios
2. Tapping into local pride
• Consumers are looking for local brands that meet their needs
• Our local brand portfolios resonate with consumers who have a sense of ownership and loyalty through pride in national identity
3. Unlocking aspirations of the middle class
• Meet consumers’ desires to be seen with premium products and socialise in the right places
• Developing Castle Lite as Africa’s leading regional premium brand
• Innovation to target new consumer occasions; bring women into the beer category; develop flavoured long alcoholic drinks

Shape footprint to contribute to growth
• Strategic alliance between SABMiller and Castel provides collective presence in 38 markets across Africa
• Coca-Cola Beverages Africa proposed transaction to create the 10th largest bottler globally with 40% of Coca-Cola beverage volumes in Africa and pro-forma revenues of $2.9bn
• Expansion into fast growing mainstream local spirits in five markets
• Integration of SABMiller Africa and SAB Pty Ltd to leverage scale

Reduce costs
• Total costs as a percentage of net producer revenue have decreased from 78% in F10 to 72% in F14.
• Efficiencies achieved through a regional procurement centre
• Synergies achieved through the integration of SABMiller Africa and SAB