Turnarounds at Miller and Peroni
When we bought Miller in July 2002, it had suffered from a long period of decline and many commentators were sceptical that we would be able to fix the second largest brewer in the US. We recognised it would take time, but drew confidence from our record of successful turnarounds in other parts of the world. We’ve now completed the analysis and restructuring phase and are in the process of implementing our three-year plan. The first green shoots of recovery are starting to show.
The plan has four areas of focus: brands, sales and distribution, costs and productivity and organisational capability. Each is important and our eventual success will depend on all these elements working together.
Within the brands, a huge amount of research was conducted into what the Miller brands stood for and what they could be made to stand for. This led to a repositioning and advertising messages initially focused on the Miller name itself and then on Miller Lite. The Atkinsinspired low-carbohydrate trend has put a fair wind behind Miller Lite and we’re using this, while it lasts, to build momentum. We are now turning our attention to Miller Genuine Draft and the rest of the portfolio.
Within distribution, our success depends on good execution in the millions of transactions that have to take place every week. Again we’ve done a lot of analysis, segmenting and prioritising the US market by channel and by geography and then aligning all marketing and sales activities accordingly. We’ve had great support from our wholesalers who are now working with us in each of these areas to implement local market plans. This process will be rolled out countrywide over the next 18 months.
For better costs and productivity, we’ve reorganised Miller’s head office, re-aligned its management structures and closed the Tumwater brewery to improve capacity utilisation.
The last of our four areas of focus is organisational capability where we aim to instil a new performance culture. Again it’s going to take time, but the Miller team has made exceptional strides in clarifying accountabilities, investing in new skills and putting in place the elements of the culture we intend to create.
We’ve tackled the problems at Miller in the only way we know – by analysing the problem, asking the right questions, applying our knowledge of the beer business and building capability. The result is a stronger, more focused business. Miller Lite is leading the recovery and in the coming months, we’ll be looking for positive signs in the rest of the brand portfolio.
The Miller acquisition was followed in May 2003 by our purchase of Peroni in Italy. Integration of the business into SABMiller is at much the same point that Miller was a year ago, although Peroni’s key brands were always in better shape. The analysis stage is almost complete, but implementation still lies ahead. Again we’re confident of generating value, particularly as the Italian market grows and consolidates.
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