SABMiller eyes $2.5 billion in Africa investment

JOHANNESBURG Mon Apr 16, 2012 10:06am EDT

JOHANNESBURG (Reuters) - SABMiller (SAB.L) plans to invest up to $2.5 billion in Africa over the next five years to build and revamp breweries, its head for the region said on Monday, as it looks to slake rising demand for beer in the fast-growing continent.

"We are still looking at around 400 to 500 million dollars a year ... for the next three to five years," Mark Bowman, SABMiller's managing director for Africa told the Reuters Africa Investment Summit.

"There's quite an attractive growth in markets outside South Africa so we will be investing basically to meet and be ahead of demand," he said in an interview at Reuters offices in Johannesburg.

SABMiller's Africa business, which excludes South Africa, is the group's biggest recipient of capital expenditure and its fastest growing, with underlying volumes in the last three months of 2011 up 11 percent.

Bowman said the London-based brewer, which is also listed in Johannesburg (SABJ.J), will use the money to build two to three breweries each year across the continent, where some breweries are running at or near full capacity.

Africa is home to a billion people and, after a decade of relative political stability, dozens of fast-growing economies. Although still poor, it is increasingly seen as the next big growth market for consumer goods.

But average beer consumption, at 8 liters per person per year, pales when compared with about 70 in North America or Europe, suggesting that few Africans can afford the beverage, which is seen as a status symbol.

Bowman said if one includes the home brew market -- where the beverage is cheaper -- beer consumption on the continent is just as big as in other developed markets.

He said with affordable prices, commercial beer consumption per capita could reach as much as 30 liters over the next 15 to 20 years in most of its markets in Africa outside South Africa.

The world's second biggest brewer is ratcheting up production of affordable beer by using local ingredients such as cassava and sorghum instead of the more expensive barley to drive growth.

SABMiller launched the first cassava-based beer late last year in Mozambique, an affordable beer blend that fetches up to 70 percent of the price of mainstream beer, thanks to lower taxes.

"Commercial beer signifies reaching some sort of level of status as opposed to drinking a home-brewed beer like chibuku," Bowman told the Summit, referring to a popular sorghum-based brew.

(For other news from the Reuters Africa Investment Summit, click here)

(Additional reporting by Enos Phosa; Editing by David Dolan and Jon Loades-Carter)

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