AB InBev to Wring Potential From Africa Beer With Exports

by Janice Kew and Loni Prinsloo

• Brewer to export Africa brands; send global beers other way
• Nigerian plant planned to tap continent’s most populous nation

Anheuser-Busch InBev NV will export African beer brands to its markets around the world as the Budweiser maker seeks to maximize the potential of a continent that was key to its decision to buy rival SABMiller for $103 billion.
“There are so many very unique African brands and I think it is time to sell African beers to the greater market,” said Ricardo Tadeu, a 40-year-old Brazilian who moved to Johannesburg from Mexico to head up AB InBev’s African operations. “There is huge potential for these brands to be exported.”

Ricardo Tadeu

Source: SAB

The world’s biggest brewer plans to sell packs of eight African beer brands outside the continent, including Castle, the dominant brand in South Africa, Kilimanjaro of Tanzania and Nigeria’s Hero. At the same time, the company will introduce global beer brands such as Budweiser, Stella Artois and
Corona in African markets, Tadeu said in an interview at AB InBev’s Johannesburg office on Wednesday.
Tadeu is responsible for spurring growth on a continent where AB InBev didn’t have a foothold before completing the purchase of SABMiller in September. About 65 million people are due to reach the legal drinking age by 2023, creating an opportunity for brewers, although Tadeu must also tackle slowing economic growth across some of the biggest markets. South Africa, where SABMiller first set up shop in 1895, expanded 0.3 percent in 2016, the slowest pace since 2009, while Nigeria is in recession after the collapse in oil prices hurt its biggest source of revenue.

Acquired Taste

With consumers in some African markets drinking an average of less than 10 liters of beer per head a year, Tadeu sees an opportunity to increase that to the average of 45 liters to 65 liters in other markets. Rolling out existing brands and increasing consumption will be key to African growth, he said.
Since taking over from SABMiller’s Mark Bowman, Tadeu has traveled extensively across the continent, often in the private jet used by his predecessor, and said he now drinks African beer brands by choice. Castle, in particular, has a “great opportunity” to become more global, he said.
“I love Castle Lite,” Tadeu said. “When you mention Bud Light I don’t see much space for that here, because I think Castle Lite is such a great light beer.”

New Investments

Within the next 12 months, AB InBev plans to invest between $150 million and $200 million on two new production lines in South Africa and look for cost cutting opportunities. The company agreed to create a 1 billion-rand ($73 million) fund to support the local beer industry and protect jobs to win government approval for the SABMiller deal, one of many concessions it made around the world to secure the takeover.
AB InBev is planning a new plant in Nigeria. Sites can cost as much as $400 million, the executive said, although the brewery will not follow Heineken NV, the world’s second-largest brewer, into other West African countries such as Ivory Coast and the Democratic Republic of Congo.
At the same time, AB InBev doesn’t have plans to reduce its presence in any of the 31 African markets in which it now operates.
“We are prioritizing what we need to do in Africa, rather than trying to find new things,” Tadeu said.
AB Inbev has completed the sale of its stake in South African drinks maker Distell Group Ltd. to the country’s Public Investment Corp., it said in a statement on Wednesday.