When SABMiller merged with Bavaria's businesses in Colombia, Peru, Ecuador and Panama in 2005, it set out to achieve annual savings of US$120 million from operating improvements and cost synergies by March 2010. By transferring skills and knowledge from around the SABMiller group to these businesses, it has more than met this savings target.
One of its first priorities was to transform the image of beer, presenting it as a high-quality, aspirational product to increase its share of the total alcohol market. The task included segmenting the market and creating a full portfolio of rejuvenated and differentiated brands and packs to match specific consumer needs and beer-drinking occasions, all backed by extensive marketing investment. Unattractive bottles were replaced with more modern shapes and graphics. A thorough overhaul of the route to market made it possible to deliver the right products to each outlet with far greater efficiency and better customer service.
The result for SABMiller is a successful portfolio of businesses that have generated an attractive return on the group's initial investment of US$7.8 billion announced in 2005. EBITA from the Latin American businesses has grown at a compound annual growth rate of 16% over this period with margins rising by 320 bps. The lessons learned from this valuable addition to the global portfolio are now being shared with other group businesses.
The Latin American business sees further opportunities for organic growth as economies grow, consumers switch to commercially produced beer from other forms of alcohol (particularly informal spirits) and consumption per capita rises to the level of other countries in the region.
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