SABMiller's biggest competitor in Africa is not another beer brand. It's bootleggers and moonshiners.
Homemade, often illegally produced, alcohol accounts for well over half of the alcohol market in the developing continent, according to statistics presented by the brewer this week at the annual meeting of the Consumer Analysts Group of New York. So when SABMiller talks about getting consumers to trade up, executives really mean moving them out of the shadows and into mainstream beer, which sells for about $1 per serving compared with roughly 30 cents for a homemade brew.
Rather than running expensive ad campaigns, the global brewer focuses on lobbying governments to lower taxes on beer. "If the government raises the excise [tax] too high, what it does is actually drives up more of that consumption [of noncommercial alcohol]," Mark Bowman, president of SABMiller in Africa, said in an interview.
The continent remains a growth opportunity for SABMiller, which operates in 36 of 52 African countries, including 22 countries in which it has a partnership with Castel. (More developed South Africa is considered a separate region). The brewer's revenue in Africa is growing at an annual rate of 16%, faster than any region except for Asia. And the market remains underdeveloped, with per capita commercial beer consumption rates of 7 liters (or about 2 gallons), compared with 77 in the U.S. and 60 in Europe.
But when homemade brews and spirits are included, "the amount of alcohol consumed in each African country is not entirely dissimilar to any other market in the world," Bowman told financial analysts at the CAGNY meeting in Boca Raton, Fla. "What we need to do is ... drive people up into the [commercial] beer category."
The strategy is not all about lobbying. The brewer employs some good-old-fashioned marketing techniques. In the mainstream category, SABMiller is rolling out new packaging or ad campaigns about every 12 to 18 months. And true to its international approach, SABMiller is emphasizing local beers -- rather than global brands. For instance, the brewer now has a local premium beer in every African market, a move that has helped move the segment from 12% to 25% of all business, Mr. Bowman said.
SABMiller is also making moves in the below mainstream segment. In Uganda, the brewer persuaded the government to lower the excise on beers made with all-local ingredients. The result was a brew called Eagle Lager, made from home-grown Epuripur sorghum -- rather than traditional malt -- and the beer is now the country's largest seller, Mr. Bowman said.
SABMiller also markets what is called "traditional beer" in several African countries. Sold in what looks like a milk carton, the beer, also called opaque beer, is brewed in a day or two and actually ferments while in the package. The beer, which has a short shelf life, sells for about 50 cents a serving. "We are looking at expanding this to other markets," Mr. Bowman said.