Our Strategic priorities
In every market, the consumer's choice of beer is influenced by a range of needs and preferences. Consumers may make different choices according to the occasion or the type of outlet that they are in, be it a bar, a restaurant or a nightclub. In some cases, the choice of beer is an aspirational statement: in others, it affirms the drinker's identity. Some consumers associate beer with 'wind-up' occasions such as parties, others with winding down at the end of a day's work. Older, more traditional drinkers will have different habits to younger, more experimental consumers.
For these reasons, it's no longer sufficient for a successful brewer just to do well in the mainstream segment. To maximise our profits in each market, we need a portfolio of brands that spans consumers' needs on different occasions and across the spectrum from premium to economy.
As we seek to understand consumer preferences and create brand portfolios that are relevant and appealing, we have a strong competitive advantage in our 'market mapping' system – a formal process for identifying the main clusters of consumer preference in any given market and comparing these with the brands currently on offer.
What we often find in new markets is that some consumer needs are ignored while others are over-served by too many undifferentiated brands. We then begin the process of adjusting the portfolio to span the market. This may mean refreshing and repositioning our brands, importing brands from elsewhere, adding innovation to existing brands or creating new brands altogether.
In many markets, the fastest-growing demand is for premium beers. To strengthen our offering, we've refreshed some of our local premium beers such as Zolotaya Bochka in Russia and Club Colombia in South America. At the same time, we've responded to the rapid growth of international premium brands by launching Peroni Nastro Azzurro, Miller Genuine Draft and Pilsner Urquell in more markets.
We're also innovating. The Polish business recently introduced new packaging for its fruit-flavoured Redd's brand, along with new variants in the form of Redd's Red and Redd's Sun. In Russia, Redd's has been given a further twist to take it out of the exclusively male domain and make it attractive to women. Innovation also extends to the way beers are served. In Europe, stylish new dispensers for Peroni Nastro Azzurro have helped to reposition the brand in bars and clubs.
While our European operations are adding excitement and choice at the premium end of the market, affordability considerations are more pressing in Africa. While the trend among sophisticated, urban drinkers is towards premium brands such as Castle, there are large numbers of subsistence-level consumers who currently drink home-brewed alcohol but would like to upgrade to affordable, branded alternatives.
One of SABMiller's answers is the Eagle brand, available in Uganda, Zambia, Zimbabwe and Tanzania. The innovation in this case is to make the beer from locally grown sorghum rather than imported raw materials. This creates a cash crop opportunity for local farmers, which in turn encourages tax breaks from governments and this feeds through into a cheaper selling price. Eagle is now our second largest pan-African brand.
Between the premium and economy segments lies the mainstream market. This still accounts for the bulk of our sales around the world, so it's vital to keep our core brands refreshed, attractive and appealing. We continue to work on our mainstream brands across our business with the emphasis on better packaging, stronger positioning and clearer differentiation.
In each market we build a portfolio of brands that span consumer needs on different occasions and across the spectrum of the economy, mainstream, and premium segments.
The South American markets which we entered in 2005 presented an opportunity to apply knowledge and techniques that were well proven in other parts of the world. In Colombia, for example, research into drinking patterns showed that beer was not seen as aspirational – a perception reinforced by shabby bottles and unappealing surroundings. When we completed our market mapping, comparing the main areas of consumer needs to the existing portfolio, we found a lot of brands clustered together in the mainstream segment and nothing of any appeal to the premium or party segment – or to women.
These results determined our plan of action. In the mainstream segment, we prised apart the three overlapping brands of Aguila, Pilsen and Poker so that each addressed a distinct national consumer segment rather than trying to cater for all consumers in its own geographical region. These brands are also being refreshed and renovated with new packaging and better presentation. In the premium segment, we introduced Peroni Nastro Azzurro at a high-profile launch in one of the country's most exclusive venues. We refocused Brava and relaunched the local brand, Club Colombia, with new packaging, improved taste, and endorsements from Colombian celebrities. Most recently we added Barena, aimed at consumers in the 'status' and 'rumba' segments. In these ways, we've not only laid claim to the premium segment but hope to have raised consumers' perception of the beer category as a whole.
We are pleased with the results to date, with lager volumes for the year growing in Colombia by 11% on a pro forma basis.
Aguila, the number one selling lager brand in Colombia.
In common with other markets, South Africa is seeing tremendous growth in the premium sector. Some of the greatest successes are in the flavoured alcoholic drinks particularly popular with women. In order to compete better in these upmarket segments, SAB Ltd introduced Lavacious Lemon, a variant of its Brutal Fruit range, in September 2006. At the same time it also launched Sarita, an apple-flavoured ale in an attractively shaped bottle with an innovative, ring-pull cap. Sales have exceeded expectations and we're gearing up production to meet demand.
Sarita advertisement campaign launched in September 2006.
A feature of the US market this year has been the growing interest in 'worthmore' beers, both local and imported. Miller Brewing Company has exploited this opportunity through brand acquisitions, product innovation and by leveraging SABMiller's global brand portfolio.
Among other moves, Miller has expanded distribution from its Leinenkugel brewery and purchased the Sparks brand, a caffeinated alcohol beverage. By way of innovation, it has launched new beer flavours such as Leinenkugel Sunset Wheat and Miller Chill, a Mexican-inspired, chelada-style light beer. A national roll-out of Miller Chill is now under-way.
Miller has also been able to fill some of the gaps in its offering by selecting from the 200 brands in the wider group portfolio – a resource that many of its competitors simply do not have. Alongside the very successful Peroni Nastro Azzurro, Miller is introducing Aguila from Colombia, and Cristal and Cusqueña from Peru.
Miller Chill, Mexican inspired, Chelada style beer.