Skip to main content

Emerging markets help SABMiller beat estimates

| Wine and liquor

Strong demand in key emerging markets ahead of the Easter holidays boosted SABMiller’s fourth quarter, beating market estimates and buoyed the global brewer’s shares as much as 3%.

SABMiller reported its total lager volumes rose 2% in the fourth quarter ended March, reflecting a strong performance led by SA and a recovery in volume growth in China which suffered a wet and cold summer. This was offset by volume weakness in North America.

Emerging market regions such as Asia, Latin America and Africa are increasingly becoming a strong growth engine for the world’s second-largest brewer, as volume declines in more mature markets persist.

The maker of Miller Lite said organic revenue growth for the full year came in at 4% — analysts were forecasting about 1.4%. Total beverage volume growth of 1% was reported.

SABMiller CE Alan Clark said the company’s topline performance was strong in the final quarter, driven by double-digit revenue growth in Africa and sustained growth in Latin America. "Asia Pacific also returned to growth during the last three months of the year as lager volumes in China returned to growth," he said.

SA proved to be one of Africa’s strongest markets, underpinned by a positive lager brand mix enhanced by innovations, modest lager price increases across some bulk and convenience packs and favourable weather conditions throughout the country over Easter and public holidays.

In Mozambique, successful in-trade execution and the group’s dual focus on premiumisation, through Castle Lite, and affordability, through its cassava-based lager, Impala, supported growth.

Soft drinks volume growth of 9% in Africa was driven by all countries except Zimbabwe, with SA and the group’s associate Castle performing particularly well.

According to KPMG, Africa has become an increasingly attractive final frontier for the global beer industry, as large populations, positive demographics developments, increasing urbanisation and higher disposable incomes improve the market potential in a largely underdeveloped industry.

In Latin America lager volumes grew 3% in the final quarter due to a strong performance ahead of Easter, particularly in Peru and Ecuador, together with affordability initiatives in Central America. SABMiller entered the territory, now its most profitable, in 2001.

The company wants to drive per capita beer consumption by making beer more affordable, growing its easy-drinking portfolio to attract women and other new consumers, as the region’s economy slows.

Also on Thursday, the world’s largest distiller, Diageo, reported an unexpected 0.7% fall in third-quarter revenue.

CEO Ivan Menezes said the group, which makes Guinness, faced tough conditions in emerging markets and subdued consumer demand in some developed markets.

Sales dropped in the Asia Pacific region and also in Europe, weighed by high single-digit sales decline in the UK.

"Emerging markets continue to lead the growth. There was probably a bit of a better performance from SA," Avior Capital Markets analyst De Wet Schutte said. "On the flip side though, which is what we also picked up from Diageo’s update, is that currencies are having a negative translation effect on the numbers. So for SAB the organic growth is good from Latin America and Africa but in the full-year results we’ll see this negative translation effect."

For SABMiller, Europe’s total beverage volume growth was driven by soft drinks, offsetting a decline in lager volumes which continued to be affected by the uncertain market conditions in Russia and Ukraine.

Pin It

Related Articles

Makro secures exclusive rights to SA’s most sou...

This week, Makro has launched its Festive liquor catalogue for 2023 - which its buyers explain is carefully crafted around local and international consumer trends. This year, the retailer managed to secure exclusive products from brands such as De...

Checkers adds 41 new wines to Odd Bins range

Checkers has added 41 new limited edition wines to its Odd Bins collection, of which two were awarded Double Gold and Gold at the prestigious Michelangelo International Wine and Spirits Awards earlier this month. 

With petrol at almost R20 a litre, food prices ...

South African consumers will have to dig deeper in their pockets at the tills this festive season, with food prices set to rise on the back of rising petrol prices, feed, and input costs.

Petrol price shocker for South Africa

Filling a 45-litre tank will cost South African motorists around R55 more from tomorrow (3 November 2021).

Consumers to face higher prices this festive se...

CRM global leader Salesforce predicted that consumers would face higher prices this coming Festive Season.