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Compañía Cervecera de Canarias faces the current economic situation by strengthening its brands (Translation)

7 September 2009

Presentation of results of the fiscal period between April 2008 and March 2009, in a worldwide complex economic context

- The contraction of consumption due to the global economic crisis affected the company's results in the last period.

- Sales in the last fiscal year were 137.1 million Euros and the profit after taxes is 20.4 million Euros.

- The savings of natural resources in production processes and a recycling and reusing index of 96.35% demonstrate the company's compromise with the environment.

Santa Cruz de Tenerife, September 3, 2009 - Compañía Cervecera de Canarias has not been immune to the delicate economic situation that the Canary Archipelago is feeling with harshness. After five years of continuous growth, sales during the last period went down 5.8% due to a fall in beer consumption and changes in consumer habits. In order to face the crisis, Compañía Cervecera de Canarias put in motion a comprehensive plan focused on consolidating its brands, improving its presence at the point of sale and optimizing the manufacturing, distribution and management processes. 

The world economic crisis has been felt especially hard in the Canary Islands because of their high dependence on tourism and construction, with an unemployment rate that exceeds 25%, way over the national average. As a consequence, consumption has gone down, resulting in a contraction of the beer market and a change in consumer habits that has diverted their preferences from the hotel to the food industry. 

The effects of having a lower number of tourists (in the case of international tourists the drop is about 7%) and a reduction of about 10% in their average spending, along with the lowest temperatures in the last 15 years, have contributed to worsening the outlook. As a result, the beer market has contracted more than 4%.

This context of instability has caused a 5.8% drop in the sales of Compañía Cervecera de Canarias compared to last year, resulting in 137.1 million Euros compared to 148.7 million from the year before. The profit after taxes reached 20.4 million Euros, 24.6% less than the previous period.

According to Mark Tindall, representative adviser of the Company, "the economic environment represents a big challenge ahead of us, but with the strength of a company that is open to change, the strength of our brands, their improved presence at the point of sale and a determined policy of cost optimization, I know we will come out stronger, assuring our leadership in the Canarian beverage market".

Market Orientation

Compañía Cervecera de Canarias is investing resources and making efforts to improve its position in the market and to consolidate the positioning of all its brands. It has maintained the leadership of its main brands Dorada and Tropical. In responding to the new tendencies, it broadened its product line by launching Siroco, a Tropical light beer, and Saturday, in the lower price segment. In the area of international brands, it strengthened its portfolio by launching Peroni Nastro Azzurro, it developed a program to boost the beer culture at the point of sale through the Beer Master Award of Pilsner Urquell, and it is still using international sponsorships with Carlsberg. In the category of complementary beverages, it is worth noting the leadership of Appletiser and the introduction of the new version Peartiser, both 100% natural beverages. In the case of Appletiser, Compañía Cervecera de Canarias started manufacturing it in the Canaries, with the subsequent investment in the modernization and adaptation of its premises.

Compromise with sustainable development

The compromise of the company with sustainable development is still a priority and it has translated into a lower consumption of natural resources during the production processes and into maintaining a recycling and reusing index of 96.35%. Also, in its compromise with society, it is still firmly supporting non-governmental organizations dedicated to the integration of communities in need and it continues to collaborate with relevant business schools in the Archipelago and the Canarian universities in research and the education of Canarian young people.

Santa Cruz Facility

Halfway between the period in question and the months of April and May of 2009, the company's management signed an agreement with the principal union of the Santa Cruz facility, supported by the workers' assembly and later ratified by the labor authority of Tenerife, for the temporary reduction of employment of a group of 73 employees. The measure involved a 20% reduction in the work hours and a 93% guaranteed salary for one year. This way, the two main objectives presented by the company were achieved: improving productivity and maintaining the jobs in the Santa Cruz facility.

Technological modernization

In spite of the unfavorable environment, the company has carried out a strong investment policy of 7.6 million Euros, in order to improve the manufacturing, distribution and management processes. The production and bottling lines have been subjects of special attention to be able to optimize the procedures. There has been a substantial modernization of machinery, especially the one conducted to start the production of Appletiser.  Also, the company has allocated important amounts to aspects regarding security and labor health, upgrades of information systems and the purchase of returnable bottles and materials for the point of sale with the purpose of improving their customer service.

About Compañía Cervecera de Canarias

CCC is one of the main beer producers at the national level and one of the most important driving forces in the economic and social development of the Canary Islands. The company is among the main Canarian companies generating wealth and growth for the regional economy, driving the creation of almost 900 direct jobs and more than 13,000 indirect jobs; participating as shareholder of several Canarian industrial companies and giving priority to local suppliers to conduct its production activities. The Company, which is part of the international group SABMiller, has more than 300 Canarian businessmen among its shareholders, which make up approximately 30% of the total and are represented by two members in the Board of Directors.

The Company produces its own beer brands Dorada, Tropical and Saturday, and under license by Carlsberg, it distributes international brands such as Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft, Guinness and Kilkenny. It also has other beverages such as the natural beverages Appletiser and Peartiser, the energy drink Red Bull and Granini premium juices.

This SABMiller subsidiary news release has been translated from its local market language to English language for publication on http://www.sabmiller.com/. We have attempted to provide an accurate translation of the original material but due to the difficulties of translation slight differences may exist.  

Note, the news release was first published in its local market on September 3rd, 2009.

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