Demand strain drives SABMiller Polish expansion

By Neil Merrett

- Last updated on GMT

Related tags: Sabmiller, Poland

SABMiller's Polish arm Kompania Piwowarska received the go ahead on
Friday by competition authorities to acquire local brewer Browar
Belgia to ease strain on its production for an undisclosed sum.

The 99.6 per cent share purchase from Palm Breweries will expand the group's presence in the country by adding an additional 1m hectolitres in production capacity as well as the Wojak, Gingers and Frater brands to its portfolio. A spokesperson for SABMiller said that the company has been encouraged to make the purchase due to the current strain on beer supply within the country, by using their increased capacity to produce their leading brands. The acquisition, which will include Browar Belgia's sole production plant in Kielce, is expected to lift the company's annual output in Poland to 16m hectolitres, according to SABMiller. "Although there has been local capacity production shortages for some time, the problem has been exacerbated by growing demand for the two leading Polish beer brands Tyskie andLechin theUKmarket,"​ the spokesperson said. The spokesperson added that the expansion was also part of a growing potential of Eastern European beer markets over their Western counterparts. "It is widely known that beers sales inEastern Europehave been growing at a faster rate than in established European markets,"​ they said. "This has been seen in the growing economic spending power within the region, as well as growing level of quality in some production.​ Alan Clark, SABMiller's European managing director said approval for the purchase of Browar Belgia was vital in ensuring customer demand in the country can be met, both in terms of cost and time efficiency. "This acquisition will immediately deliver the required expansion capacity without having to develop aGreenfieldsite,"​ he stated. "It also complements our existing manufacturing footprint and brand portfolio."​ According to SABMiller, the company has invested about €400m into the country during the last decade accounting for consistent volume growth, especially through the Tyskie, Lech and Zubr brands. SABMiller is not the only multinational making the most of growth within the market, with Carlsberg and Heineken also claiming to be profiting within the country. Browary Polskie, which is made up of the Polish assets of the three multinational brewers Carlsberg, SABMiller, and Heineken, said it had seen consistent growth in the country in recent years. The groups' sales volumes - which account for 90 per cent of the entire Polish market - were up to 32.5m hectolitres (hl) in 2006, over 30.3m hl the year before. Pawel Sudol, president of Browary Polskie, told a press conference last year that he hoped for the strong growth to continue through 2007. "Beer consumption inPolandamounts to 86-87 liters per capita annually, which means that we almost reached the average EU level,"​ he said. "Such growth as [seen in 2006] will be hard to repeat, but we would like to see beer sales rise by 2-3 per cent in 2007."

Related topics: SABMiller

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