Beer consumption declines

Brewer SABMiller says lager sales are down 1 percent in its South African operation, SA Breweries (SAB), for the period April to September 2008 as consumers feel the effect of high food and fuel prices and competition in the premium beer segment.

For the South African operation, revenue in the six months April through September 2008 was flat at USD 2 billion while the Ebita margin fell by over three percentage points to 16.5 percent from 20.1 percent during the same period in 2007.

SABMiller says that consumers in South Africa were downtrading from premium lager brands to mainstream brands like Castle and Hansa Pilsener due to the economic slowdown.

However, competition in the premium brand market – where brands like SAB’s Hansa Marzen Gold and Grolsch compete with Diageo’s Guinness and Heineken’s Amstel and Heineken – also contributed to lower volumes. It is clear from the results that the reintroduction of Amstel into the market (as an import – until 2007 is was brewed under licence by SAB) has hit sales of Hansa Marzen Gold and Castle Lite.

Overall, though, the market is probably more affected by slower economic activity than competition.