SABMiller still struggling in Australia with beer
In its first quarter trading update published on 24 July 2014, SABMiller said that sales at its Australian unit CUB fell by 6 percent, while volumes slipped by 3 percent.
Only a week later, on 31 July, SABMiller announced that for “health and personal reasons”, the SABMiller veteran Peter McLoughlin has decided to step down from his role as Marketing Director and to leave CUB. This eyebrow-raising news followed the notice of quite a few redundancies on the previous day.
Cost saving was quoted in view of falling profits. Many say there will be more haemorrhage to come.
Already in May this year SABMiller closed the Cascade Maltings – the maltster reportedly finishes up this week. Besides, they have also recently shut down the hop extract plant, which insiders say, was an intrinsic component of Foster’s beer flavour. From what we have heard, there is no longer any product innovation at CUB.
SABMiller blamed “continuing category pressure” and “competitive intensity”. That’s nothing new. SABMiller quoted the same reasons to explain why lager volumes slipped at CUB during the last full year.
CUB has tried a number of things to boost its performance. Last September, for example, the group pulled its “underperforming” 4% ABV Cold lager brand for the 3.5% ABV Carlton Cold.
Media have wondered if SABMiller is suffering from similar problems as it is in the United States, namely, craft beer. Although the craft beer market in Australia is not as big as in the U.S., Australians seem to be developing a taste for more complex brews. The country now boasts over 140 microbreweries.
Still, SABMiller’s worries should not be exaggerated. CUB has around 40 percent of the Australian beer market, though down from 55 percent in 2005. Yet, SABMiller has been trying to fix the CUB business since acquiring it from the Foster’s Group in 2011.
It seems that a quick cure is now out of the question.
Overall, SABMiller’s global revenue rose 6 percent in the three months to 30 June, while volume sold was up 3 percent.
Volume of lager, SABMiller’s core business, rose 1 percent, with a 3 percent increase in Africa and growth in China and Europe. Soft drinks volume, including drinks it sells for Coca-Cola, grew by 10 percent.
Lager volumes in Latin America declined by 2 percent, hurt by trading restrictions in Colombia, but returned to growth in Africa following earlier difficulties in countries including Mozambique, Zimbabwe and Uganda.
