The South African Breweries (SAB) says this year’s sales are off to a “steady start”, and it is optimistic it will maintain and continue growing its market share across most of its key brands.
The maker of a range of beer brands — including Castle Lager, Carling Black Label, and Lion, as well as “beyond beer” category or ciders, Flying Fish, Redds and Brutal Fruit — reported improved sales and volume growth in a year the industry was battered by the proliferation of illicit alcohol.
SAB CEO Richard Rivett-Carnac said performance was led by premium and super-premium beer brands, which grew volumes by high single digits. In the beyond beer category, the portfolio grew volumes by high single digits, led by Flying Fish and spirits-based, ready-to-drink innovations.
“Both premium beer and beyond beer are big bets for us. So, we have invested significantly behind the brands, making sure they show up in the market on the right occasions [and] are visible and available to consumers.”
Corona and Stella Artois continue to be star performers, with Rivett-Carnac saying more money will continue to be pumped into the two brands. “Both still have a lot of opportunity, and so those will remain in the premium beer segment.”
The core portfolio, including Castle and Black Label, also showed growth, “albeit, slightly low”. Said Rivett-Carnac: “Overall, our full portfolio is growing in a market that is competitive and also not showing huge amounts of growth.”
It’s not possible to get all the water we need from boreholes, so we need to continually work with the municipalities to ensure the infrastructure is maintained and the water flows.”
— Richard Rivett-Carnac, SAB CEO
He said the company was “off to a steady start” this year. “No big surprises ... but we are quietly optimistic about this year, given the macroeconomics, investor confidencem and broader consumer confidence we are seeing.”
Rivett-Carnac said illicit alcohol was one of the biggest challenges for the industry last year. “We did some research showing that one in five drinks (20%) consumed in South Africa is illicit. It is a serious problem, and we are seeing that the illicit players are more organised and professional. So undoubtedly in a strained consumer environment, where you have products that are offering good value, albeit they can be very bad for your health, we are seeing consumers turn to that.”
During the state of the nation address on Thursday, President Cyril Ramaphosa said to curb counterfeit goods, the government was “establishing a national illicit economy disruption programme that brings together key state agencies and other stakeholders, including the private sector”.
“Through effective use of data analytics and AI, we will target high-risk sectors like tobacco, fuel, alcohol and others.”
Another challenge for SAB from an operational perspective is unstable water supply in some municipalities. “We’re a big consumer of water, so we’re seeing some operational issues in our breweries, but we’re working with local authorities to overcome those problems.”
Many cities and towns across the country suffer from water shortages caused by a number of factors, including a lack of investment in infrastructure and maintenance.
Rivett-Carnac said the company continued to look at alternative sources. “The reality is, because we’re such a large user, we do need [a] consistent supply from the municipalities. It’s not possible to get all the water we need from boreholes, so we need to continually work with the municipalities to ensure the infrastructure is maintained and the water flows.”
Business Times
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