Geza Ulole
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SABMiller Will Boost Southern Sudan Output to Ward Off Diageo Competition
By Alan Boswell - Aug 6, 2010
SABMiller Plc, the world's second- biggest brewer by volume, said it plans to raise output by 52 percent at its Southern Sudanese plant this year to ward off competition from Diageo Plc's unit in neighboring Kenya.
The company is seeking to capitalize on demand that resulted in beer sales in Southern Sudan growing by double digits every month over the past year, said Ian Alsworth-Elvey, managing director of Southern Sudan Beverages Ltd., or SSBL.
"I don't think this market is big enough to sustain two brewing companies," Alsworth-Elvey said in an interview on Aug. 4 in the Southern Sudanese capital, Juba.
SABMiller last year spent $400 million opening four new breweries in sub-Saharan Africa, including operations in Mozambique, Angola and Tanzania. The London-based company generates about 12 percent of its earnings in Africa.
Southern Sudan gained autonomy from Sudan under a 2005 peace accord that ended a 21-year civil war in which 2 million people died. SSBL's brewery, which manufactures the "White Bull" and "Chairman's Extra Strong Beer" brands, was the first to open in Southern Sudan when it began operating in May 2009.
SSBL competes with products manufactured by East African Breweries Ltd., Kenya's second-biggest company by market value and in which Diageo owns a 43 percent stake.
"We are continuing to erode their market share," Alsworth- Elvey said. SSBL estimates its current share of Southern Sudan's beer market is between 55 percent and 65 percent, he said.
Rival Factory
East African Breweries plans to build a 700,000-hectoliter (18.5 million-gallon) plant in Juba, Wycliffe Masinde, an analyst at Nairobi-based Kestrel Capital East Africa Ltd., said in a May 31 e-mailed note to clients.
"We are in negotiations with the government of Sudan to solidify our presence in the region," Ken Kariuki, corporate affairs director at East African Breweries, said in a mobile- phone text message yesterday. "At the moment it is too early for me to give specifics."
Last month, Diageo said it will increase marketing spending next year in developing regions to counter an uncertain economic outlook in the U.S. and Europe.
Brewing capacity at SSBL's factory will be expanded to 350,000 hectoliters by December, from 230,000 hectoliters at present, Alsworth-Elvey said.
SSBL also has a 400,000-hectoliter plant for producing soft drinks, which it began selling in October 2009, and 70,000 hectoliters of bottled water.
Sales Forecast
While Alsworth-Elvey declined to give more specific sales figures for SSBL's operations, he said that in the first three months of the current financial year, which began on April 1, "we sold more than in the first 8 months of the previous financial year." Full-year sales are expected to increase 75% from a year earlier, he said.
SSBL will start a partnership this month with FARM-Africa, a U.K.-based aid organization, to grow cassava or sorghum in Southern Sudan for beer production. The program will take about a year to set up, Alsworth-Elvey said.
SABMiller said last year that using domestic ingredients could allow the company to slash the price of a beer by 30 percent in Africa.
Southern Sudanese will vote in a referendum in January on whether to secede from Sudan, an event that Alsworth-Elvey said he expected to be backed by voters, resulting in the creation of a new state.
Whatever the result of the referendum, Alsworth-Elvey said the company has no plans to quit its operations in Southern Sudan.
"We are here for the long run," he said.
SABMiller Will Boost Southern Sudan Output to Ward Off Diageo Competition - Bloomberg
MY TAKE: Let the beer war proceed
By Alan Boswell - Aug 6, 2010
SABMiller Plc, the world's second- biggest brewer by volume, said it plans to raise output by 52 percent at its Southern Sudanese plant this year to ward off competition from Diageo Plc's unit in neighboring Kenya.
The company is seeking to capitalize on demand that resulted in beer sales in Southern Sudan growing by double digits every month over the past year, said Ian Alsworth-Elvey, managing director of Southern Sudan Beverages Ltd., or SSBL.
"I don't think this market is big enough to sustain two brewing companies," Alsworth-Elvey said in an interview on Aug. 4 in the Southern Sudanese capital, Juba.
SABMiller last year spent $400 million opening four new breweries in sub-Saharan Africa, including operations in Mozambique, Angola and Tanzania. The London-based company generates about 12 percent of its earnings in Africa.
Southern Sudan gained autonomy from Sudan under a 2005 peace accord that ended a 21-year civil war in which 2 million people died. SSBL's brewery, which manufactures the "White Bull" and "Chairman's Extra Strong Beer" brands, was the first to open in Southern Sudan when it began operating in May 2009.
SSBL competes with products manufactured by East African Breweries Ltd., Kenya's second-biggest company by market value and in which Diageo owns a 43 percent stake.
"We are continuing to erode their market share," Alsworth- Elvey said. SSBL estimates its current share of Southern Sudan's beer market is between 55 percent and 65 percent, he said.
Rival Factory
East African Breweries plans to build a 700,000-hectoliter (18.5 million-gallon) plant in Juba, Wycliffe Masinde, an analyst at Nairobi-based Kestrel Capital East Africa Ltd., said in a May 31 e-mailed note to clients.
"We are in negotiations with the government of Sudan to solidify our presence in the region," Ken Kariuki, corporate affairs director at East African Breweries, said in a mobile- phone text message yesterday. "At the moment it is too early for me to give specifics."
Last month, Diageo said it will increase marketing spending next year in developing regions to counter an uncertain economic outlook in the U.S. and Europe.
Brewing capacity at SSBL's factory will be expanded to 350,000 hectoliters by December, from 230,000 hectoliters at present, Alsworth-Elvey said.
SSBL also has a 400,000-hectoliter plant for producing soft drinks, which it began selling in October 2009, and 70,000 hectoliters of bottled water.
Sales Forecast
While Alsworth-Elvey declined to give more specific sales figures for SSBL's operations, he said that in the first three months of the current financial year, which began on April 1, "we sold more than in the first 8 months of the previous financial year." Full-year sales are expected to increase 75% from a year earlier, he said.
SSBL will start a partnership this month with FARM-Africa, a U.K.-based aid organization, to grow cassava or sorghum in Southern Sudan for beer production. The program will take about a year to set up, Alsworth-Elvey said.
SABMiller said last year that using domestic ingredients could allow the company to slash the price of a beer by 30 percent in Africa.
Southern Sudanese will vote in a referendum in January on whether to secede from Sudan, an event that Alsworth-Elvey said he expected to be backed by voters, resulting in the creation of a new state.
Whatever the result of the referendum, Alsworth-Elvey said the company has no plans to quit its operations in Southern Sudan.
"We are here for the long run," he said.
SABMiller Will Boost Southern Sudan Output to Ward Off Diageo Competition - Bloomberg
MY TAKE: Let the beer war proceed
