SABMiller chief outlines beer market prospects

By Chris Mercer

- Last updated on GMT

Related tags Beer market Capita consumption United states Beer Sab

Consumers all over the world are trading up for their drinks, says
SABMiller's chief executive, telling an analyst conference how the
beer industry can secure long-term growth.

Graham Mackay, chief executive of SABMiller, said beer still had great potential in emerging markets in Latin America, Eastern Europe and Asia.

This was because "consumers are trading up from lower quality, cheap beer, into modernised mainstream products and then on into what we refer to as 'worthmore' brands.

"Consumers are also moving into beer as an aspirational mainstream alternative to cheap spirits, or other types of local indigenous alcohol."

Mackay, speaking at a conference in New York, said beer still had a "long way to go"​ in market share growth across emerging markets.

Average per capita consumption of beer stands at 60, 31 and 23 litres per year in SAB's markets in Eastern Europe, Latin America and China respectively, compared to an average of 84 litres per year in the US.

India, meanwhile, which houses one the world's fastest growing populations, has a per capita consumption of just one litre.

The reassurance will be welcomed by brewers amid some speculation of a slow-down in beer market growth in Russia, one of the world's fastest growing markets in recent years. UK-based Scottish and Newcastle predicted this week that Russia's beer sector would rise by three-five per cent in 2006.

Emerging markets have increasingly held up sales for international brewers over the last year amid stagnant and shrinking beer markets in Western Europe and the US. Full year results from Carlsberg, Heineken and Scottish & Newcastle this week largely confirmed the trend, despite some improved performances in the UK.

A big test now lies in how to handle mature markets going foward.

SAB's Mackay said brewers must take notice of the global consumer trade up trend: "Here in America a in other developed markets, that means growth in wine and spirits, and a move to premiumisation within the beer market."

His colleague and SAB's president for North America, Norman Adami, said SAB would work to strengthen agreements with distributors as well as establish a clearer brand position for low calorie Miller Lite and premium Miller Genuine Draft.

Adami added the group also needed to "create momentum"​ behind its high-end imported brands - Peroni Nastro Azzuro and Pilsner Urquell.

Imported and small-time 'speciality' beers have shown the best growth in the US over the last year.

The premium trend has become increasingly important in Europe too. Heineken's re-launch as a premium brand saw it increase sales in 2005, and Scottish & Newcastle's premium Grimbergen beer recorded double-digit growth in France - one of the most difficult Western European markets.

Related topics Markets Beer & cider SABMiller

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