In 30 years’ time, the African continent will be more relevant to the global beer market than North America. That is the view of Ricardo Tadeu, the Africa Zone president of Anheuser-Busch InBev (AB InBev), in dismissing any concern investors might have about the almost unprecedented 5% slump in South African beer volumes in the December quarter.
“As a company, we’re very happy to be here in SA and Africa in general and we remain very confident about the mid-and long-term outlook,” said Tadeu, talking about the first 150 days at the head of AB InBev’s African business.
That business is now part of AB InBev’s Europe, Middle East and Africa division, which reported a beer volume decrease of 1.1% in the 12 months to end-December 2016. The SABMiller volumes are only included for the last three months of that period, after the acquisition became effective.
The recently released annual report refers to the 5% drop in South African beer volumes “as a result of macroeconomic weakness and the company’s mainstream portfolio being under pressure due to a reduced price gap to higher ABV [alcohol by volume] products”.
Tadeu said 2016 was more challenging for Africa than previous years.
“You don’t expect volume declines in Africa, but volatility is expected,” said Tadeu, who believed the price hikes in SA were a bigger factor than the weak economy. The price hikes were implemented before the merger became effective.
Tadeu said the integration process following the mega-brew merger between AB InBev and SABMiller was going well. “We have almost turned the page. I’m very impressed with the South African team and its response to the new model of work,” said Tadeu.
A core part of the new model is the much greater level of information exchange between countries. And the AB InBev model also means a slimmer head office and a build-up of employees in the field.
A voluntary retrenchment exercise was finalised at the end of February. Packages were offered to 1,050 executives, with uptake from 370. Tadeu said this was about 100 more than expected and so the company was now hiring again.
The process was as unusual for AB Inbev as it was for the former SABMiller executives. It had been decades since SABMiller had to undertake a retrenchment programme. And for AB InBev, while postmerger retrenchments were nothing new, implementing a voluntary one was a unique experience.
One of the competition authorities’ conditions for approval of the merger was that any retrenchment in the first three years had to be voluntary.
Tadeu said he was following developments around the proposed Liquor Amendment Bill closely and felt AB InBev had a good opportunity to participate in the process. The local situation was part of a global trend, with evidence of increasing concern around alcohol-related harm, Tadeu said.
“We expect the regulators to do what’s best for the country and we’ll not only be compliant [but] we will undertake interventions to support government,” he said.
The beer maker executive said AB InBev had just announced a R39m investment aimed at improving conditions in taverns in townships. “Where alcohol-related problems are greater, we will invest,” he said.