Beer consumption declines but SABMiller plans for expansion
If Diageo is right, the Nigerian beer market declined in 2013 to perhaps 10 million hl from about 12 million hl in 2012. While Diageo and Heineken must be suffering from a bit of a headache given their excess capacities, rival SABMiller announced on 23 January 2014 that they need to expand their brewery in Onitsha, South Eastern Nigeria. The brewery only went on stream in August 2012 at an initial investment of over USD 100 million.
"Due to our growth and in particular the success of Hero Lager, a further USD 110 million will be invested in the brewery to triple its current annual capacity from 700,000 hl to 2.1 million hl," Simon Harvey, SABMiller Nigeria’s Managing Director was quoted as saying.
Apart from Onitsha, SABMiller operates two other breweries in Nigeria.
How much beer SABMiller actually sells in Nigeria is hard to fathom as the company’s self-attributed volume of 1.75 million hl in 2013 may include non-alcoholic malt and bottled water.
The capacity expansion at Onitsha has already begun and is due for completion in the first quarter of 2015.
The brewery will continue to produce brands including Hero Lager, Castle Milk Stout and non-alcoholic malt beverages Grand Malt and Beta Malt.
Although SABMiller seems to be doing well in Africa, the growth it registers there is failing to offset the troubles it faces elsewhere. When reporting third quarter sales (ending 31 December 2013) on 21 January 2014, SABMiller was forced to admit that total lager volumes only rose 1 percent for the whole group.
Despite lager sales rising 6 percent in Africa, 2 percent in Latin America and 13 percent in China, the declines in Europe, Australia and North America were so significant in the third quarter that the overall gain was only 1 percent. Not what analysts had expected.
At SABMiller, many will probably have remembered what SABMiller’s late chairman Graham Mackay often used to say: “If there was more of Africa, we’d invest in it.”
On the whole, Africa has proven a boon to SABMiller. Although lager sales fell in South Africa, SABMiller’s home market, revenue nonetheless rose as consumers switched to pricier brews. Except for South Sudan, which is sinking into civil war and Zimbabwe, whose economy is wobbly due to a drying up of remittances, the overall picture is not all that gloomy.
It’s a pity that Europe and North America spoilt the picture for SABMiller.
