North America

View the documentary on SABMiller's operations in North America.

History

SAB plc purchased Miller Brewing Company from Altria in 2002 to form SABMiller plc. Miller was then in the midst of a long-term declining trend in its US beer market share and had not since the early 1990s sufficiently differentiated itself from the industry’s dominant leader. The US beer industry was itself in decline, having suffered from poor quality, unsophisticated marketing at a time when US consumers began to seek greater sophistication and distinctiveness – with the spirits and wine industries taking beverage alcohol share from beer as a result. The acquisition of Miller was predicated on the belief that considerable value could be added through the transfer of SAB global best practices, more robust management across all functions of the company and the adoption of a strategy to persistently challenge the dominant industry leader with high quality, differentiated marketing. This "Able Challenger" strategy was launched in 2003 with the objectives to stabilise Miller’s share position and establish a platform for future growth. Miller’s brand marketing was significantly upgraded, its sales capabilities and distributor relationships enhanced, cost reductions achieved and an organisational and personal performance culture installed. What followed was a remarkable turnaround in the company’s operational strength and performance. Miller Lite, which comprises nearly half the company’s sales volumes, was rejuvenated, gaining significant market share and serving to recast the way that beer is marketed to US consumers, through both media and direct interaction at points of sale. Miller’s overall portfolio was stabilised, including refreshed and distinct positioning of the company’s other brands in both the worthmore and economy segments.

Current business

Miller Brewing Company produces beer at eight breweries serving the entire US and exporting globally. Miller’s F06 sales volumes were 47 mhl excluding contract brewing and 57 mhl in total. Miller’s business continues to gain in operational strength, including improvements in marketing (e.g. import segment focus, Hispanic community focus), local market area planning systems, pricing decision support systems and World Class Manufacturing implementation. Cost leadership goals have also been set which will continue to deliver further efficiencies and savings. However, significant rises in global commodity prices, increasing Miller’s packaging and energy costs, are currently offsetting such savings. And whilst Miller has implemented firm price increases since 2003, generally ahead of the industry leader, during the summer of 2005 the industry leader dramatically cut its price levels. As a result, Miller Lite’s momentum has slowed and Miller’s recent initiatives to spur growth for its High Life and Milwaukee’s Best brands have been stymied. Miller Genuine Draft has been completely relaunched across all elements of its marketing and packaging, and continuing impetus is being given to Miller’s main import brands, Peroni Nastro Azzurro and Pilsner Urquell. Further focus is also being devoted to expanding Miller’s presence in the craft beer and other high growth segments of the industry, as exemplified by Miller’s recent purchase of the Steel Reserve and Sparks brands from McKenzie River. Positioned in the high gravity and caffeinated segments of the market, these brands have surpassed 2 mhl in total and are growing at rates in the high double digits.

Future strategy

Further improvements in marketing, sales and distribution execution and manufacturing, combined with innovation and strengthening of Miller’s brand portfolio, should successfully deliver growth at Miller in a US beer industry which overall is demonstrating renewed growth potential. Miller will continue to further deepen its management strength and capabilities. In so doing the company intends to sustain Miller Lite’s momentum, restore MGD to growth, stabilise High Life and Milwaukee’s Best at new relative price positions and ensure the rapid development of Peroni Nastro Azzurro, Pilsner Urquell, Leinenkugels, Henry Weinhard’s and other worthmore brands in the US.

* Plato Logic