SABMiller announces US$260 million investment in Africa to fund capacity increases

Following strong growth in its African division, SABMiller plc [SAB: LSE/SAB:JNB] announces a US$260m investment programme to fund capacity expansion in its subsidiaries in Uganda, Ghana, Zambia and Tanzania.

SABMiller Africa’s impressive growth trajectory continued in the first half of the year to 30 September 2011, with volumes up 15 per cent. SABMiller’s growth in the region has been driven by continued investment in diverse product portfolios, enhanced distribution and consumer occasion activations. Beer has grown category share from a low base of per capita consumption, supported by a buoyant economic environment.

SABMiller Africa has seen growth of 34% in Castle premium beers (Castle Lager, Castle Lite and Castle Milk Stout). At the other end of the price spectrum, the company has introduced and expanded the reach of a range of affordable traditional and locally-sourced beers including Eagle sorghum beer, Chibuku opaque beer and Impala cassava beer.

This combination of strong underlying economic fundamentals and a full range of products at all price points has driven increased consumer demand for beer, particularly in Uganda, Zambia, Ghana and Tanzania.

Nile Breweries Ltd, Uganda (NBL)

In the six months to 30 September 2011, volumes grew by 23% in the Ugandan business. The second quarter saw double digit growth in economy, mainstream, and worthmore segments, despite capacity restraints. SABMiller’s African division plans a US$70m investment in the business, and is currently considering the most effective way to increase capacity.

Accra Brewery Ltd, Ghana (ABL)

Lager volumes grow by 54% in the first half of the financial year. ABL’s Club Premium Lager led this strong performance, with volumes growing by more than 80% in the second quarter alone in the fastest growing market in the region. ABL will receive approximately US$40m to support further capacity expansion in a fast growing market.

Zambian Breweries Ltd, Zambia (ZBL)

In Zambia, lager volumes grew 22% on the prior year as a result of increasing demand for the Castle and Mosi Gold lager brands. This growth has seen ZBL approaching its current capacity limits in a buoyant economy. To remedy this, US$70m will be invested in the business to support further capacity upgrades in the coming years, including the expansion of the Ndola brewery.

Tanzania Breweries Ltd (TBL)

Tanzania gained market share and delivered robust volume growth of 20% in the first half of the year, due in part to increased refrigeration at point of sale, a more focused distribution model and a favourable economy. Key brands, including Safari, Kilimanjaro, Castle Lager, Castle Lite and Grand Malt are all in growth and trending upward. Approximately US$80m will be invested in capacity expansions at TBL’s breweries in Arusha, Mwanza and Mbeya.

Mark Bowman, managing director of SABMiller Africa, comments: “The positive economic backdrop in Africa, very favourable demographics and current low levels of consumption underpin our confidence in making additional investment to meet the strong demand for our products in the region.

“This investment is in addition to the US$1.5bn that we have already invested in Africa in the past five years and our continued development of affordable products such as a cassava-based beer will allow us to continue to drive growth in the business and in the communities in which we operate.”