Volumes grew by 0.8%, despite the continuing tough trading
conditions and the period under review not benefiting from the
inclusion of Easter. Positive growth in the second half of the
year, particularly over the important peak season, was driven
by favourable weather conditions and the diminishing surplus
in the wine lake. Beer price increases at the retail level were
lower than for other liquor types, with evidence of some volume
flow back to beer.
Operating performance, particularly relating to efficiencies
and reliability, is at record levels. Operating margins are
up 80 basis points to 26.6%, notwithstanding the continued focus
on cost productivity being offset somewhat by significant increases
in raw material prices. Continued focus on operating performance
and asset management boosted EVA growth to a creditable 19%
on a five year compounded basis while working capital reflected
improvement for the eighth consecutive year.
Marketing spend on new product development has increased, with
a number of brands launched during the year and the company
well positioned to go to market with exciting new offerings
during this year. Sterling Light Lager was launched during the
year and received immediate consumer acceptance. Redd's has
gained significant share through the 660ml returnable pack.
Brutal Fruit, launched as a new brand in June 2002, has shown
significant potential but has been constrained by packaging
supply limitations since its launch.
Castle was a major sponsor of the recent Cricket World Cup
tournament held in South Africa. This event provided an excellent
opportunity to support the brand with a new advertising campaign
and promotional activity.
The premium/light market segment reflected double digit growth.
Two of SABMiller's international brands, Pilsner Urquell and
Miller Genuine Draft, will be added to this segment to broaden
the local portfolio during the early part of the current financial
year. This follows agreement between SAB Ltd and Heineken NV
that their joint venture in South Africa to brew and distribute
the Heineken brand would end. The existing arrangement for the
brewing and distribution of the Amstel brand through the SAB
Ltd network remains unchanged.
Revised Liquor Bill legislation is expected to be finalised
in 2003. Assurances from the relevant government department regarding
the retention by manufacturers of their depots, and their ability
to deliver direct to retailers, have again been confirmed as remaining