Despite an economic tug-of-war between Britain and its colony, SAB landed squarely under its homeland’s auspices when South Africa declared its independence in 1961.
In 2000, SAB produced no less than 53 million hectolitres of beer (or 44.5 million barrels). Its flagship brand is Castle Lager, first launched in 1898, with another 14 labels comprising its production portfolio. These include several lagers, two ales—a milk stout and a “fruit ale,” a number of European brands brewed under contract, and commercial versions of sorghum beers. SAB also controls a significant percentage of the South African soft drinks market.
SABI Africa, SAB’s international division in Africa, runs operations in almost all Southern African countries and has recently reached deeply into the eastern, central and even western African beer markets. By buying incremental percentages of shares in regional brewing companies, SABI has made its presence in these regions a force to be reckoned with.
When SABI agreed to a joint venture with Tanzanian Breweries in East Africa, this immediately sparked an intensive ‘beer war’ with Kenya. Kenyan Breweries was selling a lot of beer in Tanzania due to the mismanagement of Tanzanian Breweries Ltd. But after the joint venture with SABI, Tanzanian Breweries tripled its production, leaving Kenyan Breweries scratching for a hold in the niche.
As SABI bought up more and more of the African beer market, even in Kenya itself, Kenyan Breweries decided to fight fire with fire by entering into a partnership with Guinness International. Guinness has long held a grudge against SAB for thwarting its efforts in the South African market. This new partnership has balanced things out somewhat, but the fierce competition for a slice of the African beer pie (hmmm—beer pie) continues today.
SABI’s latest and most significant strategic alliance in Africa is with the Castel Group’s Beer Division (CBB). Whereas SABI was the dominant force in southern and east Africa, the CBB controlled the majority of the markets in central and western Africa. The alliance expands and consolidates both companies’ positions in Africa by way of a nil premium share exchange. CBB acquired a 38 percent stake in SABI and SABI now owns 20 percent of CBB.
CBB does not produce sorghum beer, but has extensive interests in the mineral water and carbonated soft drinks markets. It is interesting to note that SABI produces slightly more sorghum beer (7.2 million hectolitres/6 million barrels) than clear beer (6.7 million hectolitres/5.6 barrels) in Africa.
SABI is growing, with 79 breweries in 21 countries, and beer production increasing at 28 percent last year. In Asia, SABI owns 49 percent of China Resources Enterprises Ltd., a government-owned brewing company. China is the second largest beer market in the world. SABI has also embarked on joint ventures with an Indian brewery, which is currently under construction.
In Europe, SABI has brewing operations in Hungary, Poland, Romania, Slovakia, Russia and the Czech Republic, where SABI has just bought Pilsner Urquell. the best known Czech pilsner internationally.
The domestic success of South African Breweries is no doubt bolstered by two of the country’s most popular pastimes: braais (barbecues) and spectator sports. Both activities traditionally involve a tremendous amount of beer drinking. A single game of cricket takes five whole days to complete. That’s five whole days of sunburnt spectators dousing themselves with cold beer. Moreover, every noteworthy cricket ground (stadium) in South Africa exclusively sells SAB’s flagship brand Castle Lager from a bar called Castle Corner.
Now, if that’s not cornering a market, I don’t know what is. In Africa, and especially South Africa, SAB is to beer what Microsoft is to computers.
