E-Malt.com News article: China & India: SABMiller set to raise China, India stakes

Brewing giant SABMiller said it would continue to look for possible takeover targets in Asia, especially China and India, Europe, Africa, The Financial Times Limited reported July 3. It would use its recent South American acquisition as a platform for further growth.
Nigel Fairbrass, head of media relations, said yesterday China would be a volume growth driver for SABMiller. It also aimed to grow its market share in the country from 16% to 20%, within the next three to five years.

China Resources Snow Breweries, established in 1993, became a joint venture with SABMiller in 1994 when it bought a 49% stake in the company. Fairbrass said the company was keen to expand its business in India, which was expected to show surprising volume growth. SABMiller currently had about 70% of the market share in Africa. Fairbrass said that while there was not much more room for acquisitive expansion in Europe, it was still keen on doing deals in the region. In South America, the company was on track to meet its profitability targets in the premium segment of the market, said Fairbrass. South America was expected to be SABMiller's biggest profit growth area.
SABMiller, which has joint ventures in Australia and Vietnam, wanted to expand in Asia, said Fairbrass. China, a volume growth area, was growing rapidly. The company sold double the amount that South African beer drinkers consumed, annually in China. Dirk Kotze, an analyst at Coronation Fund Managers, said the Chinese market was clearly important to SABMiller. The brewing giant had a good market position, and had paid less per hectolitre than other companies, by taking over existing capacity and migrating the acquisitions onto their brand platform.

Fairbrass said the average person's beer consumption in China was about 23l a year. South Africans on average drank about 60l each a year, while Americans drank about 80l each a year. Czech Republic drinkers had the highest consumption at 162l each a year.

But Fairbrass said volumes in China varied and were lower in poorer, rural areas. The company was expanding regionally, due to China's vast size. Kotze said that the emergence of pricing power depended on how fast smaller semistate owned enterprises would exit the industry. SABMiller had avoided head-on competition in areas of the country, where its competitors were strong. Most of the easy areas had been accessed, and the remainder of the market would be more competitive. Fairbrass said that the company would do deals to add capacity in China. But would consider greenfields capacity expansion as it was cheaper to build capacity than to buy assets.

SABMiller would also be investing in capacity in Europe and India.



04 July, 2007