AB-InBev plans to launch value option

South Africa | AB-InBev has suffered over recent quarters in South Africa not least because of a depressed consumer economy. During the first quarter 2019, domestic beer sales declined by “mid-single digits”.

AB-InBev’s strategy is to add more brands across the spectrum of income and taste levels, with Budweiser the chosen premium brand, according to CEO Carlos Brito. During a recent visit to Johannesburg, he told reporters that a value – or more affordable – option will be introduced at a later date.

Currently, drinking age adults consume 87 litres of beer per person per year. However, there is a huge disparity between the genders. Women drink only 26 litres per capita compared with men (140 litres beer per capita). In addition, consumers in the low and high income brackets only drink 78 litres and 79 litres respectively, which is below what middle income consumers knock back: 90 litres per capita.

As Marcel Regis, AB-InBev’s President for South Africa said at the brewer’s 2018 Africa conference, there is an extremely large disparity between the very rich and very poor. People are looking for value for their money and presently only find it in cheap spirits and low priced wines. What is more, the informal alcohol market is around 20 percent of the total alcohol market in South Africa.

So from AB-InBev’s understanding, the affordability trend is something that will continue into the future.

Already, AB-InBev is offering the local Lion brand as an affordable option. In 2018, a 750 ml bottle of Lion was priced at ZAR10 (USD 0.66), whereas a 660 ml bottle of Budweiser cost ZAR18 (USD 1.20). The question is: will the new value option mean a larger bottle at the bottom price point or will AB-InBev actually cut the price on Lion?