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‘Cold, wet winter’ subdues SAB Miller Chinese volumes

By Ben Bouckley+

22-Jan-2013
Last updated on 22-Jan-2013 at 16:07 GMT

SAB Miller is blaming ‘exceptionally cold and wet winter weather’ for a third quarter volume decline in China, which meant lager volumes declined in its Asia Pacific business by 1% overall.

Today’s interim management statement covers the group’s third quarter ending December 31 2012 (the fiscal year 2013) and reports lager volumes 2% ahead of the same quarter ending 2011, with soft drinks 3% up on an organic, constant currency basis.

Group revenues grew by 8% in Q3 2012/13, and margins improved – with group revenue per hectoliter up 5% – reflecting selective price increases and an improved brand mix in most regions.

SAB Miller said that overall financial performance for Q3 was in line with management expectations.

But despite 18% volume growth in India, the 3% decline in China hit the business unit hard (the company has a joint venture here, CR Snow, with native brewer China Resources Enterprises), and SAB also failed to reverse declining volumes in Australia, with quarterly sales 4% below 2012 levels.

Rivals ramp up Chinese capacity

Addressing concerns over slowing Chinese growth in a Q&A during SAB’s H1 2013 results announcement last November, CEO Graham Mackay said the country was going through a “once every 10 years political transition” that had hit spending patterns.

Hu Jintao, the current president of China will step down this year, having given up his post as Communist Party Secretary in 2012.

Although SAB hoped that the end of this transition would spell a return to historical growth patterns, Mackay admitted that competition in China’s beer market had increased.

“There is no question that quite a lot of capacity has come on stream. It’s relatively high grade capacity, much of it owned by our larger competitors,” he added.

Czech volumes take a tumble

In Europe SAB’s lager volumes rose 1% on an organic basis, with depressed consumer confidence hitting home: quarterly volumes fell 2% in Poland.

Czech domestic volumes fell 11%, impacted by the continuing decline in the high value on-premise channel, in which we are more strongly represented, along with the impact of reduced promotional activity and the selective price increases in October 2012,” the company said.

However, quarterly volumes rose 23% in Romania due to the success of new economy brand Ciucas in a new PET pack, and volumes were up mid-single digits in other European markets.

And despite continued woes for Anadolu Efes in beer (SAB’s associate is market leader in Turkey, Kazakhstan, Georgia and Moldova, and operates 8 breweries in Russia), which suffered a 7% pro forma volume decline, this fall was offset by 24% growth in soft drinks for the business.

Latin American Q3 volumes rose 6% overall, while in Africa they increased 4%, although excise increases in Tanzania (volumes -13%) and Zimbabwe (where SAB Miller took pricing) hit volumes.

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