Africa the new frontier for AB InBev
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The company has forayed into Africa at a time of difficulties for some of the region’s economies, with growth expected to continue to be muzzled for the next few years, according to some economists.
Dirina Mançellari, a senior economist at FocusEconomics, says growth in sub-Saharan Africa will “remain subdued (for this year) on the back of economic and political challenges across the region” as well as lack of much-needed structural reforms.
“Economic progress will depend to a significant extent on how fast governments can implement reforms aimed at promoting growth, re-establishing macroeconomic stability and enhancing trade links within the region."
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But riding on SABMiller’s experience on the continent, AB InBev - the biggest brewer in the world - has set its immediate sights on understanding the African markets and boosting growth.
Although Robyn Chalmers, a communications director for AB InBev African operations, reckons that it is “too early to comment on investments in specific markets,” the company is “committed to accelerating growth across” the value chain, from retailers to growers.
“The long-term outlook for Africa is hugely attractive: markets with increasing gross domestic products, a growing middle class and expanding economic opportunities,” Chalmers said.
Africa had been a strong market for SABMiller before its amalgamation into AB InBev and average beer sales volumes have been around 50 million hectolitres. South Africa, a mature beer market, makes a big contribution to this, said Chalmers.
AB InBev geared up to create a giant brewery company that will grow its top line and bring in new investments. But its efforts will likely be dented by fears that it will institute retrenchments in some of the African markets that it gained exposure after merging with SABMiller.
In some of the markets, AB InBev has been given the nod for its merger deal with SABMiller units on the understanding that growers will continue to be supported and that the company will not institute retrenchments.
Subsidiary companies such as Delta Corporation in Zimbabwe initially said there would be no significant impact to operations from the merger deal.