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Will Africa quench AB InBev's thirst?

Wednesday, October 14, 2015 - 01:39

Much of AB InBev's interest in SABMiller stems from the potential growth of beer markets in Africa, a continent of a billion people. But as Ivor Bennett reports, the commodity price slump could also hit the region's bars.

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It's not hard to see where the interest in SABMiller lies. Africa is home to over 40 new brands for Anheuser Busch InBev. As well as a very thirsty market. CEBR economist Vicky Pryce. SOUNDBITE (English) VICKY PRYCE, CHIEF ECONOMIC ADVISER, CENTRE FOR ECONOMIC AND BUSINESS RESEARCH, SAYING: "There are huge opportunities in a number of the emerging markets of course. Whether it's Africa, whether it's what's going on in China - the areas where the middle class is really developing and developing in huge numbers - and of course to be able to exploit that you need to be big." Size won't be a problem. The 100-billion-dollar-plus merger will give AB InBev a third of the world's beers. The bigger challenge - Africa's commodity price slump. It's already hurt economic growth and there are fears it could reverse drinking habits. From branded beer back to cheaper sorghum-based alternatives. Ups and downs brewers will have to get used to, says Pryce. SOUNDBITE (English) VICKY PRYCE, CHIEF ECONOMIC ADVISER, CENTRE FOR ECONOMIC AND BUSINESS RESEARCH, SAYING: "There are so many commodity-producing countries in Africa. Look at South Africa for example, look at Zambia with copper. And of course the oil itself, in the countries that produce it, whether it's Angola or Nigeria. So, of course, this is going to slow things down." SAB - South African Breweries - is a powerful brand It first sold its Castle lager back in the 19th century And its takeover is stirring nationalist sentiment. One union has said it'll oppose the merger, raising fears over jobs. So too South Africa's National Treasury should tax erosion prove too great. A new name perhaps, could, in part, help win them over. But retaining the local flavour won't be easy. Anheuser-Busch AmBev Interbrew South African Breweries Miller isn't exactly catchy.

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Will Africa quench AB InBev's thirst?

Wednesday, October 14, 2015 - 01:39