SABMiller plc History



Address:
One Stanhope Gate
London W1K 1AF
United Kingdom

Telephone: (20) 7659-0100
Fax: (20) 7659-0111

Website:
Public Company
Incorporated: 1895 as The South African Breweries Limited
Employees: 42,402
Sales: $9.11 billion (2003)
Stock Exchanges: London Johannesburg
Ticker Symbol: SAB.L
NAIC: 312120 Breweries; 551112 Offices of Other Holding Companies; 312111 Soft Drink Manufacturing

Company Perspectives:

SABMiller plc is an international company committed to achieving sustained commercial success, principally in beer and other beverages, but also with strategic investments in hotels and gaming. We achieve this by meeting the aspirations of our customers through quality products and services and by sharing fairly among all stakeholders the wealth and opportunities generated, and by seeking business partners who share our values. Thereby, we fulfil our goals of business growth and maximised long-term shareholder value, while behaving in a socially responsible and progressive manner.

Key Dates:

1895:
The South African Breweries Limited (SAB) is incorporated in London, with a listing on the London Stock Exchange and ownership of Castle Brewery in Johannesburg, South Africa.
1897:
SAB becomes the first industrial company to be listed on the Johannesburg Stock Exchange.
1898:
Company begins producing Castle lager, which becomes a phenomenal success.
1899:
The outbreak of the Boer War forces Castle Brewery to close for nearly a year.
1925:
Company diversifies into soft drinks, buying a stake in the Schweppes Company.
1950:
The head office is moved from London to Johannesburg.
1956:
SAB acquires Ohlsson's Cape Breweries and United Breweries, thereby uniting the three largest South African brewing companies and gaining 90 percent of the domestic market.
1970:
SAB is reincorporated in South Africa.
1977:
Company takes control of Amalgamated Beverage Industries Ltd., a Coca-Cola bottler in South Africa.
1979:
SAB acquires the beer interests of the Rembrandt Group--giving it nearly 99 percent of the South African market--and turns over its wine and spirits operation to an independent subsidiary in which it owned a 30 percent interest; 49 percent stake is taken in Appletiser South Africa (Pty.) Ltd., a producer of fruit drinks.
1990:
Dismantling of apartheid begins.
1993:
International expansion into emerging markets begins with the purchase of majority control of Dreher Breweries, the largest brewer in Hungary.
1994:
SAB enters the Chinese beer market through a joint venture with China Resources Enterprise Limited.
1997:
Two-year program of divesting noncore assets begins.
1999:
SAB relocates headquarters to London, reincorporates as South African Breweries plc; divestment program reduces interests to beer, soft drinks, wine and spirits, and hotels and gaming.
2000:
Company buys its first brewery in India.
2001:
SAB enters Central American market through purchase of Honduran beverage company and creation of a joint venture, BevCo Ltd., with a prominent family in El Salvador.
2002:
SAB acquires Miller Brewing Company, the number two U.S. beer maker, from Philip Morris Companies Inc. for $3.48 billion in stock; company renames itself SABMiller plc.
2003:
Company makes its first major investment in Western Europe, purchasing a 60 percent stake in Birra Peroni S.p.A., Italy's number two brewer.

Company History:

SABMiller plc ranks as the world's second largest brewer in terms of volume, trailing only Anheuser-Busch Companies, Inc. Although now based in London, the company owns no breweries in the United Kingdom. Its true home country is South Africa, where The South African Breweries Limited (SAB) was founded in 1895 and where SABMiller today holds an impressive 98 percent share of the beer market. The firm operates seven breweries in South Africa, where it sells 14 brands of beer, including local lager Castle (the best-selling beer in Africa), SABMiller import brands Pilsner Urquell and Miller Genuine Draft, and one foreign brand brewed under license--Amstel. The company also maintains a major presence in the South African soft drink market through a 74 percent interest in Amalgamated Beverage Industries Ltd., the country's largest bottler and distributor of the Coca-Cola line of products, and full ownership of Appletiser South Africa (Pty.) Ltd., a producer of nonalcoholic sparkling fruit juices. In addition, SABMiller owns a 30 percent stake in Distell Group Ltd., the leading distributor of wines and spirits in South Africa, and 49 percent of Tsogo Sun Holdings (Pty.) Ltd., an operator of hotels and casinos in southern Africa.

South African Breweries embarked on an aggressive program of overseas expansion in the post-apartheid era, initially concentrating on the emerging markets of sub-Saharan Africa, central Europe (first entered in 1993, in Hungary), China (1994), India (2000), and Central America (2001). By the early 2000s SAB was the number two brewer in China and produced two-thirds of all beer in Africa. In July 2002 SAB acquired Miller Brewing Company, the number two U.S. beer producer, and renamed itself SABMiller plc. This move into the developed world was followed by a second, the June 2003 purchase of majority control of Birra Peroni S.p.A., Italy's second largest brewer. Via this acquisition spree, SABMiller had by late 2003 amassed a total of 115 breweries in about two dozen countries on four continents.

The history of SAB is in many ways the history of the South African brewing industry, most notably through the government-ordered merger of the largest breweries in 1956. The company's history was also greatly influenced by the apartheid system and its effect on the domestic economy, on domestic firms, and on foreign investment in South Africa.

Early History

The discovery of gold on the Witwatersrand (a region encompassing Johannesburg) in 1875 brought large numbers of prospectors to South Africa. Small outposts for white settlers were transformed into busy cities with new industries. Several brewmasters, most with little experience, began to produce a variety of beers that immediately gained popularity with the settlers.

In 1889 a British sailor named Frederick Mead left his ship in Durban and took a job working in the canteen of a local army garrison at Fort Napier. While there, Mead, who was only 20, became acquainted with a businessman in Pietermaritzburg named George Raw. Neither of them knew anything about brewing, but they persuaded the local residents to help establish the Natal Brewery Syndicate. After purchasing a factory site, Frederick Mead returned to England to procure machinery and raise capital. In need of brewing expertise, Mead approached W.H. Hackblock, head of Morgan's Brewery in Norwich. The two men became friends and Hackblock agreed to serve as chairman of Mead's company, which was registered in 1890 as the Natal Brewery Syndicate (South East Africa) Limited. The company brewed its first beer in July 1891.

Mead remained interested in establishing a brewery in the rapidly growing Witwatersrand. In 1892 he purchased the Castle Brewery in Johannesburg from its proprietor Charles Glass. The expansion of this facility, however, was beyond the means of the Natal Brewery Syndicate, and Mead returned to England to attract new investors. In the final arrangement, Mead formed another larger company based in London called The South African United Breweries. This company took over the operations of both the Natal Brewery Syndicate and the Castle Brewery.

After construction of the new Castle Brewery, South African United Breweries made additional share offerings which were purchased by South Africa's largest investment houses. Subsequent growth precipitated a restructuring of the company and reincorporation in London on May 15, 1895, as The South African Breweries Limited.

In 1896 South African Breweries purchased its first boarding houses. That same year, Frederick Mead moved to England for health reasons but continued to occupy a seat on the board of directors and frequently returned to South Africa. From London, Mead directed the purchase of machinery for brewing lager beer from the Pfaudler Vacuum Company in the United States. Patent restrictions and mechanical difficulties delayed production of Castle lager until 1898. The beer gained such widespread popularity that competing breweries rushed to introduce their own lagers.

South African Breweries, or SAB, was listed on the London Stock Exchange in 1895 and two years later became the first industrial company to be listed on the Johannesburg Stock Exchange. Through these listings SAB had greater access to additional investor capital.

On October 11, 1899, a war broke out between British colonial forces and Dutch and Huguenot settlers known as Boers. The war drove residents of Johannesburg out of the city and forced the Castle Brewery to close for almost a year. When British troops recovered the area, the brewery had sustained little or no damage. British authorities regarded the plant as an essential industry and encouraged the company to resume production in August 1900. Disrupted supply lines caused shortages of yeast and other raw materials, but within a year production had returned to full capacity.

The Boer War ended in 1902 but was followed by a severe economic depression. The brewing industry was not as adversely affected as others, however, and SAB was able to continue its expansion across southern Africa. The company acquired the Durban Breweries and Distillers company, and established a new plant at Bloemfontein. SAB purchased Morgan's Brewery in Port Elizabeth in 1906 and, five years later, acquired another brewery in Salisbury, Rhodesia (now Harare, Zimbabwe). At its northernmost point, SAB established a brewery at Ndola, northern Rhodesia (now Zambia).

W.H. Hackblock died in 1907 and was succeeded as chairman by Sydney Chambers. In 1912 Chambers led the company into an innovative arrangement with its competitor, Ohlsson's Brewery, to cultivate hops jointly at a site near the city of George, midway between Port Elizabeth and Cape Town. A joint subsidiary called Union Hop Growers spent many years developing new hybrids, which delayed the first commercial use of South African-grown hops until 1920.

Diversified into Bottles, Lodging, and Mineral Water in Early 20th Century

After Frederick Mead died in August 1915, John Stroyan, who succeeded Sydney Chambers a few months earlier, became the most important figure in SAB management. Stroyan faced a serious challenge the following year when hostilities during World War I interrupted the supply of bottles to South Africa. SAB decided to establish its own bottle-making plants in 1917. Actual production, however, did not begin until 1919, the year the war ended.

Another economic depression beset South Africa after World War I, but steady growth in the demand for beer reduced many of the detrimental effects of the depression. SAB was financially strong enough in 1921 to purchase the Grand Hotel in Cape Town, an important addition to the company's lodging business. SAB gained an interest in the mineral water business in 1925, when it purchased a substantial interest in the Schweppes Company.

The Great Depression of the early 1930s had little effect on the South African brewing industry; SAB continued to expand its operations and improve its facilities. The company's biggest problems were shortages of labor and capital. The Spanish Civil War and rising political tensions in Europe during the mid- and late 1930s caused a disruption in the supply of cork to South Africa. Faced with a severe shortage of cork seals for its beer, SAB developed a method of recycling old cork until a new supplier of cork could be found.

Castle Beer accompanied South African soldiers to the East African and Mediterranean theaters of World War II, but apart from its involvement in Europe, South Africa was relatively unaffected by World War II. When hostilities ended in 1945, SAB turned its attention to further modernization and expansion. Arthur Griffith-Boscawen, who had succeeded John Stroyan as chairman in 1940, died in 1946, and was replaced by John Stroyan's son, Captain John R.A. Stroyan. Under the leadership of the younger Stroyan, SAB concentrated on the establishment of a South African barley industry as an extension of the joint agricultural project it operated with Ohlsson's.

Takeover of Ohlsson's and United Breweries in 1956

South African Breweries entered a new stage of its development in 1950. That year, in the midst of a large corporate modernization program, SAB decided to move its head office from London to Johannesburg. In 1951 the company acquired the Hotel Victoria in Johannesburg, and a second brewery in Salisbury. Captain Stroyan retired the following year and returned to England. His successor, a talented barrister named J.K. Cockburn Millar, died after only four months in office, and was replaced by a solicitor, S.J. Constance.

After producing nothing but beer for more than 60 years, SAB began to introduce a range of liquor products. The incentive to diversify was provided by increased taxes on beer. Consumption of beer in South Africa fell for the first time on record and showed every indication of further decline.

Officials of the three largest brewing companies in South Africa, SAB, Ohlsson's Cape Breweries, and United Breweries, met on several occasions in London and Johannesburg to discuss the viability of competition under deteriorating market conditions. In 1956 these officials decided that the three companies should merge their operations into one large brewing concern. SAB acquired all the shares of Ohlsson's and United Breweries, thus retaining the South African Breweries name. B.C. Smither of Ohlsson's and M.W.J. Bull of United Breweries joined the SAB board of directors.

Although the new company controlled 90 percent of the market for beer in South Africa, antiquated production facilities narrowed profit margins. In response, company activities were centralized in the Transvaal and the Western Province, areas where the three companies had previously competed. In addition, the old Castle Brewery in Johannesburg was closed in 1958. After succeeding Constance as chairman in 1959, M.W.J. Bull initiated a further diversification into wines and spirits. In 1960 SAB acquired the Stellenbosch Farmers Winery and later added Monis Wineries. Bull retired at the end of 1964 and was replaced by Dr. Frans J.C. Cronje, an economist and lawyer with substantial experience in government.

The company encountered a severe financial crisis in 1966 when Whitbread and Heineken entered the South African beer market. The most damaging market developments, however, came from government quarters as successive increases in excise duties made beer the most heavily taxed beverage per serving. Consumers began to abandon beer for wine and sorghum beer. SAB was able to reduce the effect of this crisis by increased sales of products from the Stellenbosch winery.

South African Breweries CEO Ted Sceales was instrumental in the creation in 1966 of a new subsidiary called Barsab Investment Trust, jointly held by SAB and Thomas Barlow & Sons Ltd. (later Barlow Rand), the rapidly expanding mining services group. Barsab permitted SAB and Barlow to invest in each other and pool their managerial and administrative resources. It also provided SAB with the resources needed to adapt to rapidly changing market conditions. Sceales died following an auto accident in 1967, but the success of Barsab continued under the new chief executive, Dick Goss.

South African Breweries first attempted to move its legal domicile from Britain to South Africa in 1950, but was prevented from doing so by complex tax obligations to the British government. Consequently, SAB, which still derived about one-third of its income from investments in Rhodesia and Zambia, was bound to observe the British trade embargo against Rhodesia in 1967.

Reincorporated in South Africa in 1970

Parliamentary motions to permit the reincorporation of SAB in South Africa were initiated in 1968. These motions, however, did not gain approval until March 17, 1970. On May 26, 1970, after 75 years as an English company, SAB became a de jure South African company.

During the mid- to late 1960s SAB began brewing a number of new beers--some under license from foreign brewers--including Guinness, Amstel, Carling Black Label, and Rogue. The company also acquired the Old Dutch and Stag brands, as well as Whitbread in South Africa. While sales of wine and spirits continued to rise, SAB sold a number of its liquor-oriented hotels, and reorganized those that remained under a new subsidiary called the Southern Sun Hotel Corporation. Southern Sun, which operated 50 hotels in South Africa, was formed by the merger in 1969 of the existing SAB hotel interests with those of the Sol Kerzner family.

The South African government barred SAB from further investment in the liquor industry and limited its ability to invest overseas. The company then made several attempts to diversify its operations. In 1972 SAB and Barlow Rand decided to alter their collaboration and dissolve Barsab. As a result, two former Barsab holdings, the Shoe Corporation, and Afcol, South Africa's largest furniture manufacturer, came under SAB control. The following year, SAB acquired OK Bazaars, a large discount department store chain. Certain other investments were disposed of, however, including ventures in banking and food products.

Several brewing interests attempted to challenge SAB's dominant position in the South African market. Various German interests set up breweries in Botswana and Swaziland in a failed attempt to gain a foothold in South Africa. Louis Luyt, a South African entrepreneur, also failed, and sold his breweries to the Rembrandt Group in 1973. The Luyt breweries, which formed the core of Rembrandt's alcoholic beverage group, were later incorporated as Intercontinental Breweries. Determined to succeed, Rembrandt's chairman, Dr. Anton Rupert, committed his company to a scheme of competition based on control of liquor retail outlets. In 1978 Rembrandt acquired a 49 percent share of Gilbey's, the third largest liquor group in South Africa. The addition of Gilbey's 100 retail outlets gave Rembrandt access to a total of 450 stores. South African Breweries responded by acquiring Union Wine, an independent liquor retailer with 24 hotels and over 50 retail outlets.

Once again, market conditions were not conducive to competition. The government, therefore, proposed a rationalization program in which SAB would take over Rembrandt's brewing interests--giving it nearly a 99 percent market share in South Africa--and turn over its wine and spirits operations to an independent subsidiary called Cape Wine and Distillers. The program, executed in November 1979, also called for Rembrandt to turn over its Oude Meester wine and spirits operations to Cape Wines, in which SAB, Rembrandt, and the KWV wine growers cooperative each owned a 30 percent interest. The remaining 10 percent interest was sold to private investors. Also in 1979 SAB gained a 49 percent stake in Appletiser South Africa (Pty.) Ltd., a producer of nonalcoholic sparkling fruit juices; full control of Appletiser was gained three years later.

Government Restrictions Leading to More Diversification: 1980s and Early 1990s

By the early 1980s the South African government's system of racial separation (apartheid) and deteriorating social conditions for blacks had become international issues. Many business leaders openly called for change, but the government still prevented companies such as SAB from transferring capital out of South Africa through foreign investments. Often these companies had little choice but to reinvest their surplus capital in South African ventures, which in turn gave them a more crucial interest in the resolution of social and human rights problems within South Africa.

Many foreign-owned companies, which faced fewer restrictions on divestment, sold their South African subsidiaries and closed their offices in South Africa. This trend made acquisitions by South African companies easier. SAB had taken over control of Amalgamated Beverage Industries Ltd., a Coca-Cola bottler, from the Coca-Cola Company in 1977, and later added several clothing retailers, including Scotts Stores (acquired in 1981) and the Edgars chain (added in 1982). A government order in 1979 for SAB to sell its Solly Kramer retail liquor stores was completed in 1986, five years before its deadline. Also in 1986 SAB established a joint venture with Ceres Fruit Juices to sell leading noncarbonated juice brands Ceres, Liquifruit, and Fruitee.

In 1987 Murray B. Hofmeyer succeeded Cronje as chairman. Hofmeyer and his successor, Meyer Kahn, continued to diversify through acquisition, adding Lion Match Company, the leading manufacturer of safety matches in Africa, in 1987; Da Gama Textiles Company, a leading South African textile manufacturer, in 1989; and the Plate Glass Group, a manufacturer of glass and board products, in 1992.

International Expansion in the Post-Apartheid Era

The dismantling of apartheid finally began in 1990, with the unbanning of opposition political parties, including the African National Congress (ANC), and the release of political prisoners, including Nelson Mandela. Major political changes rapidly followed. In 1991 the remaining apartheid laws were repealed. In 1992, an all-white referendum approved a new constitution that would lead to eventual free elections. Finally, in 1994, the first nationwide free elections were held and were won by the ANC, with Mandela elected president.

SAB--acting largely out of self-interest given that 85 percent of the beer in South Africa was purchased by blacks--was well out in front of the political changes as it had begun to hire blacks in the early 1980s. By 1985, 28 percent of salaried employees were black, a figure that rose to 48 percent by 1994. Nevertheless, the threat of a government-forced breakup of SAB's beer monopoly hung over the company following the end of apartheid.

Partly in response to this threat, and partly in response to the loosening of laws regarding foreign investment, the Kahn-led South African Breweries aggressively expanded outside its home country starting in 1993. That year, SAB spent $50 million for an 80 percent stake in Hungary's largest brewer, Dreher Breweries, the first of a series of moves into the emerging markets of central Europe. From 1995 to 1997 the company gained joint control of two of the largest breweries in Poland, Lech Brewery and Tyskie Brewery, as well as three breweries in Romania and one in Slovakia. In 1994 SAB created a joint venture with Hong Kong-based China Resources Enterprise Limited; by early 1998 this joint venture had gained majority control of five breweries in China. A third area of foreign growth for SAB was in sub-Saharan Africa, where management control was gained of breweries in Botswana, Swaziland, Lesotho, Zambia, Tanzania, Mozambique, Ghana, Kenya, Ethiopia, Zimbabwe, and Uganda during this period.

In August 1997 Kahn was appointed chief executive of the South African police service, becoming the first civilian to hold the post. The outspoken Kahn, who had been vocal in calling for the rapid liberalization of the economy and for a restoration of law and order, was made responsible for cracking down on a national crime epidemic. Taking over as acting chairman of SAB was Cyril Ramaphosa, South Africa's most prominent black capitalist and a former militant trade unionist.

By this time, South African Breweries was the world's fourth largest brewer and had a rapidly expanding international brewing empire. The company was now free to unload its noncore businesses in order to concentrate more closely on brewing and its other beverage operations. Under Ramaphosa, it did just that. From late 1997 through early 1999 SAB divested its holdings in OK Bazaars, Afcol, Da Gama Textiles, Edgars, Lion Match, and Conshu Holdings, a footwear maker. With the mid-1999 sale of Plate Glass, SAB had trimmed its holdings down to beer, soft drinks, wine and liquor, and hotels and gaming.

The year 1999 was a pivotal year in SAB's history for a host of other reasons as well. Seeking access to capital markets better endowed that those at home, the company in early 1999 shifted its headquarters back to London--reincorporating itself as South African Breweries plc--and moved its primary stock exchange listing from Johannesburg to London, retaining the former as a secondary listing. As part of its London listing, it raised £300 million to fund further international expansion. There were also changes on the management front. Kahn returned to the chairmanship, his two-and-a-half-year stint at the police service complete; Ramaphosa remained on the board as a director. In addition, Graham Mackey, who had served as group managing director since 1997, was named chief executive in early 1999. On the international front, SAB acquired a stake in a sixth Chinese brewery in 1999 and began producing beer in Russia at Kaluga Brewing Company, which had been acquired the previous year. SAB's two Polish breweries, Lech and Tyskie, were merged to form Kompania Piwowarska S.A. The most important brewery transaction that year, however, occurred in October, when SAB acquired from Nomura International plc for $321 million a controlling interest in Pilsner Urquell and Radegast, two brewers in the Czech Republic that combined comprised the leader (with a 44 percent market share) in a nation whose citizens consumed more beer per capita than anyone else in the world. The crown jewel of this deal was the Pilsner Urquell brand, the most famous Czech beer and the original pilsner, first produced at a brewery in Pilsen in 1842. SAB began laying plans to make Pilsner Urquell the company's flagship brand outside of Africa and to seek entrée into developed markets through the export of this brand. Via this acquisition, South African Breweries became the leader of the central European beer market and jumped into third place among global brewing titans.

Moving into the Developed World As SABMiller, Early 2000s

SAB's drive into emerging markets continued in the early 2000s. South African Breweries entered the Indian beer market for the first time in 2000, taking a majority stake in Narang Breweries. Control of two more Indian brewers, Mysore Breweries and Rochees Breweries, was purchased the following year. In April 2001 SAB and the Castel group, the two largest beverage companies on the African continent, entered into a strategic alliance whereby SAB exchanged a 38 percent interest in its African division (excluding South Africa) for a 20 percent stake in Castel's beer business. SAB thus gained a share of a wider array of African breweries, and the two partners also agreed to seek investments in new African markets via 50-50 joint ventures. Also in 2001 SAB entered into a new joint venture in China with the Sichuan Blue Sword Breweries Group, which owned ten breweries in Sichuan province. SAB now had interests in more than two dozen Chinese breweries and had positioned itself as that nation's number two brewer, trailing only Tsingtao. Yet another development in 2001 was that South African Breweries became the first international brewer to enter the Central American market. In November the company acquired a 97 percent stake in Cervecería Hondureña, S.A., the sole brewer and the largest bottler of soft drinks (Coca-Cola) in Honduras, from the Dole Food Company Inc. for $537 million. Simultaneously, SAB and the prominent Meza family of El Salvador created a joint venture called BevCo Ltd. to which SAB contributed its new Honduran holding and the Meza family contributed the bulk of its brewing, soft drink, and bottled water businesses in El Salvador.

By fiscal 2002, just eight years after its first brewing acquisition outside of Africa, 55 percent of SAB's $4.36 billion in revenues were derived from its non-South African operations. This figure would shoot up to an even more remarkable 75 percent just one year later following the company's boldest move yet--its takeover of Miller Brewing Company, the number two beer maker in the world's largest beer market, the United States, whose main brands included Miller Genuine Draft, Miller High Life, Miller Lite, and Milwaukee's Best. Consummated in July 2002, the deal consisted of a stock swap with Miller's owner, Philip Morris Companies Inc., that was valued at $3.48 billion. SAB additionally absorbed $2 billion in Miller debt. Upon completion of the acquisition, SAB changed its name to SABMiller plc and was now the world's number two brewer, behind only Anheuser-Busch. Philip Morris (which changed its name to Altria Group, Inc. in 2003) became the biggest SABMiller shareholder with a 36 percent economic interest and 25 percent of the voting rights (the total at which it was capped) and also gained three seats on the SABMiller board. Miller had recorded 2001 revenues of $4.24 billion but had for some time been losing market share to the number one and number three U.S. players, Anheuser-Busch and Adolph Coors Company, respectively. SABMiller took immediate action to try to reverse Miller's fortunes, announcing that one of Miller's nine U.S. breweries would be closed, and bringing in a new CEO for Miller, Norman Adami, who had headed up the South African brewery operations of SABMiller.

In March 2003, in a further pullback from noncore operations, SABMiller moved its entire hotel and gaming interests into a new company called Tsogo Sun Holdings (Pty.) Ltd., which was to be majority controlled by black empowerment company Tsogo Investments. SABMiller held an initial 49 percent interest in the new company but said that it intended to continue to reduce its hospitality holdings. Despite having just completed the Miller acquisition, the company did not shy away from making additional purchases and deals. Early in 2003 Browar Dojlidy, a brewer in northeastern Poland, was acquired for $38 million. In June SABMiller made its first major investment in Western Europe, buying a 60 percent stake in Birra Peroni S.p.A., the number two brewing company in Italy, for EUR 246 million ($279 million). Later in 2003 Peroni ended its licensed brewing and selling of the Budweiser brand in Italy and instead started import sales of Miller Genuine Draft. Similar synergies between SABMiller's increasingly global operations were being implemented, such as the launch of Pilsner Urquell and Miller Genuine Draft in South Africa in early 2003 and the introduction of Miller Genuine Draft into several more European countries, including Russia, Romania, the Czech Republic, and Poland. Over in Asia, SABMiller consolidated its operations in India under Mysore Breweries; the operations of Mysore were then consolidated with the brewing operations of Shaw Wallace and Company Limited, the second largest brewing group in India, to form a joint venture called Shaw Wallace Breweries Limited, 50 percent owned by Mysore. This deal cost SABMiller $132.8 million. The firm spent an additional HK$675 million ($87 million) for a 29.6 percent stake in Harbin Group Limited, China's fourth largest brewer and the leader in that country's northeastern region.

The SABMiller of the early 21st century, a globally active company with a sharp focus on beverages--mainly beer--was a far different company from the apartheid-era SAB, which was centered largely in South Africa where it had diversified interests. SABMiller had been built through a bold yet focused program of international expansion. It faced a real challenge, however, in turning around Miller Brewing, a process that Mackey said in late 2002 could take two to three years. In addition to attempting to make Miller Genuine Draft an international premium brand and launching new advertising campaigns in the United States, the new owners of Miller also planned to prune the more than 57 brands in the Miller portfolio, focusing more on the higher end of the market. SABMiller's bold moves, though clearly not yet fully realized, had the potential for a huge payoff.

Principal Subsidiaries: CENTRAL ADMINISTRATION: SABMiller Finance B.V. (Netherlands); SABSA Holdings (Pty.) Ltd.; SABMiller Africa and Asia B.V. (Netherlands). MILLER--US OPERATIONS: Miller Brewing Company (U.S.A.); Foster's USA, LLC (50%); Jacob Leinenkugel Brewing Co., Inc. (U.S.A.). CENTRAL AMERICAN OPERATIONS: BevCo Ltd. (British Virgin Islands; 58%); Cervecería Hondureña, S.A. (Honduras; 58%); Industrias La Constancia, S.A. (El Salvador; 58%); La Constancia, S.A. (El Salvador; 58%); Embotelladora Salvadoreña, S.A. (El Salvador; 58%); Industrias Cristal, S.A. (El Salvador; 58%). EUROPEAN OPERATIONS: SABMiller Europe B.V. (Netherlands); Birra Peroni S.p.A. (Italy; 60%); Compania de Bere Romania (97%); Compania Cervecera de Canarias S.A. (Spain; 51%); Dreher Sörgyárak Rt. (Hungary; 99%); Kaluga Brewery Company OOO (Russia); Kompania Piwowarska S.A. (Poland; 72%); Pivovar Saris AS (Slovakia); Plzenský Prazdroj S.A. (Czech Republic; 97%). AFRICAN OPERATIONS: SABMiller Africa B.V. (Netherlands; 62%); SABMiller Botswana B.V. (Netherlands; 62%); Accra Brewery Ltd. (Ghana; 43%); Botswana Breweries (Pty.) Ltd. (29%); Cervejas de Moçambique SARL (Mozambique; 43%); Coca-Cola Bottling Luanda Ltd. (Angola; 28%); Coca-Cola Bottling Sul de Angola SARL (37%); Chibuku Products Ltd. (Malawi; 31%); Kgalagadi Breweries (Pty.) Ltd. (Botswana; 29%); Lesotho Brewing Company (Pty.) Ltd. (Lesotho; 24%); National Breweries plc (Zambia; 43%); Nile Breweries Ltd. (Uganda; 59%); Swaziland Brewers Ltd. (37%); Tanzania Breweries Ltd. (33%); Zambian Breweries plc (53%). ASIAN OPERATIONS: SABMiller Asia B.V. (Netherlands); Mysore Breweries Ltd. (India; 83%); Narang Breweries (Pvt.) Ltd. (India; 85%); Rochees Breweries Ltd. (India; 81%). BEER SOUTH AFRICA: The South African Breweries Ltd.; South African Breweries Hop Farms (Pty.) Ltd.; Southern Associated Maltsters (Pty.) Ltd. OTHER BEVERAGE INTERESTS: Other Beverage Interests (Pty.) Ltd.; Amalgamated Beverage Industries Ltd. (74%); Appletiser South Africa (Pty.) Ltd.

Principal Competitors: Adolph Coors Co.; Anheuser-Busch Companies, Inc.; Heineken N.V.; Interbrew S.A.; Carlsberg A/S; Companhia de Bebidas das Américas.

Further Reading:

  • Anderson, Robert, and John Willman, "SAB Buys Czech Republic's Largest Brewer," Financial Times, October 8, 1999, p. 23.
  • Ashurst, Mark, "Breweries Chief to Head SA Crackdown on Crime," Financial Times, May 26, 1997, p. 22.
  • "Big Lion, Small Cage," Economist, August 12, 2000, p. 56.
  • Bilefsky, Dan, "Miller Beer Aims to Be Icon in Europe," Wall Street Journal, June 13, 2003, p. B7.
  • Block, Robert, "South Africa's Corporate Exodus Picks Up: A Big Brewer Announces It Is Moving to London," Wall Street Journal, December 7, 1998, p. A26.
  • Bobinski, Christopher, and Roderick Oram, "South African Breweries in Polish Acquisition," Financial Times, October 2, 1996, p. 24.
  • Branch, Shelly, "Ailing Miller Will Be Big Concern for New Philip Morris Chief," Wall Street Journal, January 30, 2002, p. B1.
  • Fairclough, Gordon, "Philip Morris to Sell Miller to SAB," Wall Street Journal, May 30, 2002, p. A3.
  • Fridjhon, Michael, and Andy Murray, Conspiracy of Giants: The South African Liquor Industry, Johannesburg: D. Stein, 1986.
  • Grey, Sarah, "No Small Beer from This SA Giant," Accountancy, November 1997, pp. 26-27.
  • Hawthorne, Peter, and Jan Stojaspal, "They Just Get Lager and Lager," Time International, December 20, 1999, p. 45.
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Source: International Directory of Company Histories, Vol.59. St. James Press, 2004.