Reference: Published by Shaun Jacobs on Daily Investor , 24 March 2023
Despite diminishing production elsewhere in Africa and a challenging economic climate, South African Breweries (SAB) is investing to further expand its capacity in South Africa, where beer volumes are at an all-time high.
This Monday, AB InBev, the parent company of SAB, announced its financial results for 2022. The multinational brewer reported revenue of $57.8 billion.
In 2022, $8.1 billion of total income came from Africa, which saw tremendous growth under the leadership of South Africa.
The largest beer firm was created in 2016 when AB InBev acquired SABMiller for $107 billion, joining the two biggest brewers in the world. They collectively own about half of the profit for the entire sector.
Even if supply chain issues hindered AB InBev’s Nigerian business, its African operations generated over 90 million hectolitres of beer in 2022.
In 2022, SAB’s volume growth was in the “high single digits,” and its South African business saw “all-time high total volumes.”
In South Africa, beer’s market share of alcoholic beverages increased in 2019 and surpassed pre-pandemic levels.
SAB is the owner of several of the most valuable brands in the nation, including Carling Black Label, which is the most valuable brand overall.
Moreover, it is the owner of the Brutal Fruit, Budweiser, Corona, Flying Fish, Hansa Pilsener, Lion Lager, Smirnoff, and Stella Artois brands in South Africa.
In South Africa, SAB is also in charge of Red Bull’s sales and distribution.
Investing in the future, Currently, SAB runs a number of breweries, malt facilities, and agricultural businesses in South Africa.
Almost 24,000 employment were supported by the company’s R920 million investment in its Prospecton and Ibhayi breweries in 2022, which supported the brewing of beer.
This is a portion of SAB’s R4.5 billion total investment in the South African economy, which aims to generate 10,000 new employment there.
SAB now has 5,657 direct employees in South Africa. Around 140,000 employment are projected to be supported by the entire value chain, which includes 1,277 South African farmers and 3,739 suppliers.
SAB beers are 97% locally sourced from farm to bottle.
Difficult working conditions, AB InBev described the many risks it confronts in the nations it works in, including South Africa, in its annual report.
60% of the company’s revenue comes from developing economies, which exposes it to issues with such markets include political unrest, financial risk, governmental meddling, and “a lack of care of public infrastructure.”
Operations are disrupted as a result of these issues, and operating costs increase.
SAB’s emphasis on locally focused supply chains and investment in renewable energy has allowed it to largely avoid problems specific to South Africa, such as load shedding and inefficient rail and port systems.
By 2025, the company’s South African operations hope to be entirely off the grid, partly to lessen the effects of load-shedding and to satisfy its ESG goals.
All of SAB’s breweries in South Africa are currently powered by renewable sources and have backup systems to lessen load-shedding.
Moreover, AB InBev mentioned how increasing South African excise taxes “adversely affect our revenue and profitability.”