Beer giant to limit price increases despite spiking inflation
Despite the spike in food inflation, beer drinkers won’t have to fork out much more money for the satisfaction of a cold beer.
Michel Doukeris, the new global CEO of brewing giant AB InBev, which owns South African Breweries (SAB), says the company is working hard to manage costs and cushion its customers against price increases.
Doukeris was speaking at a media roundtable in Johannesburg on Thursday, on his first official visit to South Africa since assuming his role in July 2021.
According to Doukeris, the company’s exposure to diverse markets – which face vastly different inflationary pressures – has helped it build a resilient business model that’s able to shield consumers from rising cost pressures.
“When we look at what’s happening globally, we see across all categories prices going up but we see that beer so far is lagging inflation. Meaning that the price increases that we put in the market, they are falling behind inflation,” he says.
“We try to organise our price actions in ways that take into consideration not only costs but the overall industry and the overall economies and purchase power for consumers.”
This cushioning against knee-jerk price increases can be observed in the performance of SAB’s premium brands, which according to SAB CEO Richard Rivett-Carnac, has retained its customer base despite the current economic climate, even registering some growth.
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“What we are seeing is a slight shift where people are living a little bit more for the now and I think that the pandemic has driven some of that change in behaviours,” Rivett-Carnac says.
“We’ve seen growth in premium. Obviously, there are a lot of consumers – especially in South Africa – that are feeling the effects of unemployment and the reality of the economy that we live in but the people who can afford premium products [are] choosing to go out and engage and choose those premium products.”
SA growth prospects
According to Rivett-Carnac, SAB has a large appetite to explore growth in the country by means of expanding production capacity to facilitate economic growth.
At the fourth SA Investment Conference that took place in March in Sandton, SAB announced plans to invest a further R920 million into the country’s economy.
Read: SAB to invest R920m in its Prospecton and Ibhayi breweries
The investment, which is set to go towards the expansion and upgrade of SAB’s Prospection plant in KwaZulu-Natal and brewery in the Eastern Cape, is expected to generate up to 15 000 jobs for the respective provincial economies.
“We find ourselves in South Africa at a pivotal moment – after a very tough two years through the pandemic, we are very confident in the future that we see in SA and that’s reflective in the investment commitment made,” says Rivett-Carnac.
Expanding on where the brewer sees growth potential, Rivett-Carnac adds that SAB is excited about the growth trajectory in its ‘beyond beer’ brands, including the likes of Flying Fish and Brutal Fruit.
As SAB’s fastest growing portfolio, Rivett-Carnac says the brewer is looking at directing new investments into supporting growth in this part of the business.
“We are very excited about what we call our beyond beer portfolio that has been growing above the market [average] and has been taking share within that portfolio.
“So within the premium [portfolio] and within expanding our overall offering to the market, we see significant growth in SA and, in fact, a lot of our new investment is around anticipating the growth that we see in these segments of the market.”