E-Malt.com News article: South Africa: SABMiller’s share price decreases after unsuccessful bid for Foster’s

SABMiller, the second-largest brewer in the world and the largest brewer in South Africa, experienced a 7% bounce-back in its share price last week after its $10-billion bid for Australian brewer Fosters fell through, Business Live reported on July, 9.

According to an industry analyst, who did not want to be named, the rebound was nothing more than a "relief rally". He said the market thought the deal was a bad idea.

BP Bernstein, a stock broking firm with over 50 years of experience in the securities market, in a research note, said: "SABMiller appears more optimistic about the long-term prospects for the Australian beer market than we are, and believes the decline in the beer category could be reversed. It's certainly true that Australia is likely to continue to benefit from the strongest population growth in the developed world.

"However, current beer consumption at 83 litres per capita is already among the highest in the world; and high GDP per cap is likely to favour premium spirits and wine in the longer-term. Beer may have a lower share of throat than in some other developed markets but we see the same socio-demographic pressures that apply in other mature markets, such as the ever-increasing importance of women as consumers of alcohol," it said.

The company is, however, not limiting its sights to the Oceanic region alone. It has zoned in the Latin American market as a source of growth.

SABMiller announced, through its Latin American president, Karl Lippert, last week that the region still had attractive prospects for continued growth. According to him, the group's medium-term outlook for the region is for beer volumes to grow at a compound annual rate of 5-8%.

Lippert said the Latin American division had a strong track record. The region was the largest contributor to group earnings in the year to March. It contributed 20% of volumes, 22% of revenues and 31% of earnings.

The company's share price retreated by 1.03% from its July 5th close to trade at R248.67 in morning trade on July, 6.

13 July, 2011