Background of SABMiller:
* Founded in 1895 in South Africa as South African Breweries (SAB) * 1948-1994: bad effects from “apartheid” regime. The investments from and to South Africa were restricted. So SAB had to focus on dominating domestic market through acquisition of competitors and increasing the efficiency of production and distribution facilities. * By 1979, SAB hold 99% market share in South Africa and play the leading role in other markets in the region. * 1978 SAB acquired Sun City casino resort
* In 1990s, SAB focus on expanding throughout Africa region. The changing in South Africa political system (the establishment of multiracial democracy in S.A.) made the progress easier * By 2000, SAB dominated the southern Africa, competition is lesser, but no room for expansion * In 1993, SAB acquired Dreher, Hungary’s largest brewery. This was the company first acquisition outside Africa. * In 1990s, SAB continued to expand to under-developed markets. In 1994, SAB formed a joint venture in China, China Resources Snow Breweries, and added China’s biggest beer brand, Snow, to its portfolio. After that were some acquisitions in Eastern Europe (Lech, Tyskie…) * By 2001, by focusing on emerging markets, SAB became the world’s fifth largest brewer by volume, with breweries in 24 countries across the globe. * In 1999, SAB listed on London Stock Exchange (LSE)
* In 2002, SAB acquired a major brand in developed market: Miller Brewing Company, the 2nd largest in US. SAB then became SABMiller, the 2nd largest brewery by volume in the world. * In the first year operating SABMiller operating Miller, its US market share dropped from 19.6% to 18.7%. Miller’s product portfolio would be rationalization from 50 brands to 11 or 12. * In 2003, the company made its first significant acquisition in Western Europe when it acquired Italy’s BirraPeroni. * In 2005, SABMiller merged with GrupoEmpresarial Bavaria, the 2nd largest brewer in South America. Latin America became the 2nd largest source of profits after South Africa.
Anglo-South African brewing giant SABMiller is the world's second-largest brewing company in terms of both market capitalisation and group revenues, behind US-Belgian giant Anheuser-Busch InBev. The company has a huge global footprint; it is present in: Latin America, Africa, Europe, Asia and North America via its MillerCoors joint venture. The brewer has four global brands - Grolsch, Miller Genuine Draft, Peroni and Pilsner Urquell - in addition to a massive 192 regional brands. SWOT Analysis
A diverse geographic footprint provides protection from demand downturns in specific regions/markets Massive emerging market exposure means the firm has access to underdeveloped, high-growth markets A vast range of local and international brands means that the company has multiple pricing points and can target consumers within different income ranges First mover advantage, and significant dominance in many operating markets gives the firm significant pricing power Weaknesses
While Asia contributes significantly to volumes, it does not to revenues or earnings meaning that the firm is not fully exploiting the potential of the Asian consumer A reliance on EMs, while good for growth, is not supportive of sales growth among higher-end, premium brands Opportunities
The company has a massive footprint in underdeveloped African beer markets and will enjoy first mover advantage there as the consumer story in the region develops Large scale M&A would enable SABMiller to boost revenues and consolidate its position as one of the global brewing behemoths Even as emerging beer markets mature, premiumisation - as value sales growth takes over from volume - will emerge as another growth stimulant for the company Threats
Competition in EMs could undermine SABMiller's dominance and certainly its pricing power in markets in which it was formerly dominant Government legislation,...
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