SAB Miller says it is confident that its subsidiary Alliance Beverages has done nothing wrong after Diageo’s South Africa JV United National Breweries accused the business of uncompetitive practices.
South Africa's Sunday Times reported on September 8 that sorghum-based brewer United National Breweries (UNB) is accusing Alliance Beverages of buying up stocks of UNB’s brand Chibuku from a wholesaler in the Northwest of the country and replacing it with its Eyethu brand.
Thus, according to the paper, AB stands accused of abuse of market dominance, predatory pricing and unfairly leveraging the success of a rival sorghum (‘unqombothi’ in local parlance) beer brand.
Diageo aware of ‘ongoing’ SAB Miller concerns
We were unable to reach UNB for comment, but a Diageo spokeswoman told BeverageDaily.com that the UK firm was aware of its JV’s complaint to the Competition Commission of South Africa.
“As a shareholder of UNB, Diageo is aware that UNB has had ongoing concerns, from an anti-competitive perspective, with a number of SAB Miller’s activities in South Africa,” she said.
“Given that these activities have continued, it is our understanding that UNB management felt they had no option but to protect the business by making a complaint to the South African Competition Authorities,” she added, referring further questions to UNB management.
An SAB Miller spokesman told BeverageDaily.com that his firm – which is the biggest brewer in Africa as a whole, had not heard from the Commission about the complaint and did not have further details.
Noting that UNB is the largest producer and distributor of traditional opaque beer in South Africa, he added that SAB Miller Africa only recently established AB to import traditional opaque beer into the country from Botswana, where it is brewed.
SAB Miller’s ‘fledgling’ Botswana business
“The business is still fledgling, has only been operating a couple of weeks and is tiny in comparison to UNB,” the spokesman said, insisting that SAB Miller would review details of any complaint and respond accordingly.
“We are confident that Alliance Beverages is not involved in anti-competitive behaviour. We confirm our unwavering commitment to operating in a way that is pro consumer and pro competitive.”
Sorghum-based beer is popular among lower earners in South Africa, and its popularity led Guinness brandowner Diageo to spend $36m on a 50% stake in UNB’s sorghum beer business this January.
Chibuku – which SAB Miller itself holds the license for in every African country bar South Africa – is made using maize and/or sorghum and is a short shelf life, low alcohol beer; sold for 50-70% less than standard lager, it ferments within cartons or PET packages.
Alcohol content rises from 0.5% to 4% ABV the day before the beer’s expiry date, and SAB Miller sees such traditional-style African beer brands as a means of “meeting the consumer halfway”, lifting him from informal or illicit alcohol and then to better-known lager brands as income levels rise.