As the World’s No2 brewer, SABMiller expands traditional African beer, Chibuku, across ten countries on the c0ntinent, the company missed growth targets in the six-months to September.
Following successful production pilot schemes, SABMiller has launched full-scale beer production in Ghana, Mozambique, Swaziland and Tanzania, with further pilots running in Lesotho and Uganda with a view to commercial production starting within months.
This expansion more than doubles the brand’s African operations in 2011, at which point production was in place in Botswana, Malawi, Zambia and Zimbabwe.
SABMiller has seen a $16 million stream of investment pumped into production of the African favoured beer over the past 18 months, with the company hoping to reach a production volume of half a million hectolitres in its new markets by the end of financial year 2012/13.
Chibuku is an innovative low-cost beer product, aimed at lower-income sections of society. The branded beer’s main rivals on the African market are various types of home-brewed alcohol, which are often dangerous for consumption-prompting the company’s move into this market, where demand is high for a cheap and safe product.
The beer is produced with an alcohol content of 0.5 percent, and continues to ferment over the five days of its recommended shelf-life. By day five, the alcohol content of the beverage grows to 4 percent. Due to the short shelf-life of the product, production needs to take place relatively locally to the sale location – thus the expansion of the company’s production to new countries will open up numerous new markets.
Chibuku is made using maize and/or sorghum depending on local preferences; the company sources the ingredients from local farmers – at year-end March 2012, SABMiller reported the purchase of said ingredients from 40,000 small-scale local farmers, thus fuelling the lower end of the economy, and supporting African communities.
While the expansion to new countries is good news, SABMiller simultaneously reported disappointment with regard to beer volume growth. While the company had estimated volume growth of 8.5 percent in Africa, results for the six months ended 30th September showed a volume growth of only 6 percent.
Excluding South African operations, the company blamed its under-performance on increased tax obligations in Tanzania – counteracting any profit growth.
Stocks in the London-based company responded badly to the revelation of missed growth targets, dropping as much as 1.5 per cent in London on Thursday; trading at 0.2613 British Pounds ($ 0.4193).
