/ 1 January 2002

SAB: African heavyweight expands into the US

Beer brands such as Castle, Ursus and Zero Clock may mean little to most Americans, but in emerging markets in Africa, Romania and China they have helped establish South African Breweries as a leading global competitor.

By acquiring Miller Brewing Co., South African Breweries hopes to complement its strength in developing countries with a firm base in the United States, the world’s biggest beer market.

Until Thursday’s deal, the majority of SAB’s business was in Africa. The company was founded in 1895 in South Africa, and retains a listing on the Johannesburg Stock Exchange.

It moved its primary stock listing to the London Stock Exchange in 1999 to increase its access to capital for international expansion. The company is now headquartered in London.

SAB’s expansion outside of Africa has come largely through the acquisition of other breweries. Chief executive Graham Mackay stresses the importance of respecting local brands rather than trying to foist a few mega-brands across all markets.

”A sort of Coca-Cola model or Marlboro model for world beer is generations off,” he told a news conference.

SAB employs 31 000 people and owns brands in some 30 countries in Eastern Europe, Asia and Central America as well as Africa. It also has investments in hotels and casinos in South Africa, although Mackay said it hopes to divest from this business to focus more completely on beer.

The company earned net income of $293-million for the year ending March 31, on sales of $4,36-billion.

Mackay acknowledged that one of the few blemishes on last year’s results was the impact on earnings from the depreciating South African rand, in which SAB still earns much of its sales. This currency sensitivity has helped spur the company on the path to international growth. – Sapa-AP