Africa continued to show double-digit growth in beer and soft drink sales volumes in the three months to June, giving SABMiller a good reason to expand in the continent.
The second-largest brewer said yesterday that in its first quarter to June strong volume growth in Africa, South Africa and Europe balanced out the poor performance experienced in North America and Australia.
When the group outlined plans to dispose of its R11.7 billion stake in Tsogo Sun, SABMiller indicated that the proceeds of the transaction would be reinvested in the company’s core growth business, particularly its African operations.
Group net producer revenue increased by 6 percent with total beverage volumes rising 3 percent on an organic basis.
Lager volumes rose 1 percent on an organic basis, driven by Africa, China and Europe.
Trading conditions remained difficult in Australia, with net producer revenue declining by 6 percent, which reflected the volume fall of 3 percent.
“We continue to drive strong net producer revenue growth across our business. This has been achieved through prolonged successes in building local and global flagship brands across our broad geographic footprint, together with innovations and improved trade executions,” SABMiller chief executive Alan Clark said.
In South Africa, the brewer said Castle Lite and Castle Milk Stout delivered double-digit volume growth. This was attributable to the strong focus on brand building and marketing. A rise in lager volume also benefited from Easter holidays falling during the period and favourable weather conditions, the brewer noted.
Despite the challenging economic environment, revenue in SABMiller’s home market grew 12 percent with volume growth up to 6 percent. This reflected price increases and the continuing premiumisation of the portfolio, as well as favourable Easter weather.
Rand depreciation affected revenue in the South African soft drink category, which grew by only 1 percent in sterling terms. This was despite volume growth of 11 percent, which benefited from public holidays and was further driven by effective trade execution, focus on the full brand portfolio, and price point management of bulk packs, the brewer said.
Elsewhere in Africa, SABMiller was able to increase its net producer revenue by 11 percent, driven by pricing increases and beverage volume growth of 5 percent.
Lager volumes in the continent grew 3 percent, which reflected market share gains, SABMiller said.
Soft drinks also experienced good growth with a volume increase of 9 percent driven by strong performances in Ghana, Zambia and Nigeria. Tanzania had a slow start to the quarter because of heavy rains, but volumes recovered last month.
Poor economic fundamentals in Zimbabwe slowed growth in beer volumes. Strong growth in Nigerian revenue was assisted by the recently commissioned incremental capacity.
Markets in Latin America delivered growth of 5 percent in revenue through selective price increases and a favourable brand mix despite a 6 percent decline in lager volumes in Colombia.
China continued to drive sales in the Asia Pacific region with revenue increasing by 8 percent, reflecting volume growth of 4 percent.
In Europe, the UK led with revenue rising by 23 percent pushed by growth of Peroni Nastro Azzurro. North America’s 2 percent decline in volumes kept revenue gains to 3 percent.