SABMiller’s glass overflows with help from new beer products

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Londiwe Buthelezi

If it is not the introduction of new beer styles in South Africa that is helping SABMiller gain some market share, it is the launch of new products that target specific drinking ages in its other operations.

Yesterday the global brewing house and its US partner, Molson Coors Brewing Company, reported that their joint venture, MillerCoors grew underlying net income by 7.4 percent to $291.9 million (R3.1 billion) in the first quarter.

While premium light beer portfolio sales declined to mid-single digits in the quarter to April, MillerCoors gained market share in the high-margin and its fast growing “Above Premium” beverages. This portfolio includes brands like Redd’s, Leinenkugel’s and the company’s newly launched Miller Fortune.

MillerCoors’ Above Premium portfolio sales grew by high-teen percentages in the first quarter, which the company said was above the industry average in this segment.

It launched Miller Fortune in February this year and the new brand gained a 0.3 percent share of total industry volume within a month.

“In Above Premium, we are expanding the category and attracting new legal drinking age consumers to beer with our innovations and brands like Leinenkugel’s and Blue Moon,” MillerCoors’ chief executive Tom Long said in an update issued yesterday.

Even last year, when MillerCoors faced difficult trading conditions in the US market, the company reported solid pricing and strong Above Premium sales growth.

The company began focusing on the Above Premium beer in the past year, first with the launch of Redd’s Apple Ale.

MillerCoors said the Redd’s franchise more than doubled its volumes in the first quarter and Redd’s Apple Ale was one of the fastest growing brands in the US beer category.

The Above Premium, also known as Super-premiums is top crafted beer that are a notch above the old flagship “premium” brands. In South Africa, brands that are often defined as such include Bavaria Bräu, Heineken and Guinness.

While the Above Premium range enjoyed market share gain, MillerCoors Premium Light portfolio, which had been key to the company’s success, has faced challenging times recently, including in the first quarter. But the company is looking at different ways to revive these brands, including their packaging and marketing.

SABMiller did the same in its South African operations in the past year for its premium brands, Castle Lite and Castle Milk (Stout), and gained some market share in the convenience packs category.

Like in its US joint venture, SABMiller was looking to shake up its local beer portfolio by expanding to new beer styles like ales, the company chairman Norman Adami had told Business Report.

MillerCoors increased its total net sales by 0.1 percent to $1.79bn in the first quarter. Its domestic net revenue per barrel, excluding contract brewing and company-owned distributor sales, increased by 3.3 percent.

But its domestic sales-to-retail and sales-to-wholesalers decreased by 3.4 percent and 3 percent, respectively.

Third-party contract brewing volumes were also down by 4.5 percent.

SABMiller shares lost 1.75 percent to close at R562.08 yesterday.


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