SABMiller Defends Turf From Heineken in Soccer Battle
SABMiller Plc, which controls 87.7 percent of the world’s ninth-largest beer market, is stepping up investment to counter inroads into its dominant position by Brandhouse Ltd., whose owners include Heineken NV and Diageo Plc. For the monthlong World Cup, the maker of Castle lager has spent $22.4 million on advertising, promotions, renovating taverns and sponsoring the South African national team.
SABMiller’s domination of South Africa’s beer market was slipping before Heineken opened a brewery in Africa’s largest economy this year. Its share of spending on non-sorghum brews fell 2.1 percentage points in the year through March, while Brandhouse’s share rose by 2.2 percentage points. Brandhouse is the South African distributor of Heineken’s Amstel brand, which until 2007 was brewed under license in the country by SABMiller.
SABMiller has said it expects to sell 30 million more beers, or 100,000 hectoliters, as a result of the World Cup, which runs until July 11. South Africa consumes about 27 million hectoliters of beer in a year. Brandhouse declined to comment on how the event is likely to affect its sales volumes.
The company started a price campaign for Amstel last month, encouraging customers to pay no more than 10 rand ($1.3) for the premium lager, which excludes the 1 rand fee for the returnable 660 milliliter (22 ounce) bottle. That price makes Amstel only 1 rand more expensive than a “mainstream beer,” Brandhouse said.
“More and more consumers are coming into the market for whom that 1 rand premium is acceptable,” said Gavin Pike, marketing director of Brandhouse.
South Africa’s vast black townships are where as much as 80 percent of SABMiller’s beer is sold in the country, and half of that is through shebeens. SABMiller has increased the number of representatives it sends to taverns and shebeens, illegal bars in townships that can be little more than a fridge and a serving hatch. Shebeens are a legacy of white rule when blacks weren’t allowed to buy clear or full-strength beer.
Alexandra township is home to hundreds of thousands of the country’s poorest, and is one of 42 townships that SAB is targeting. That includes more regular deliveries of stock and increased visits from sales representatives.
It is not just the legal resellers SAB is supporting. Shebeen owners are now being targeted directly for the first time with advice on how to run their business and on how to access SAB special offers through independent retail distributors that have supply agreements with the brewer. SABMiller cut costs by $80 million in South Africa in the year ended March and that money has been reinvested into the brewer’s brands.
The presence of Heineken and Brandhouse has really sharpened up their game.
By Nicky Smith
Based on the following sources:
http://www.businessweek.com/
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