Hangover for SABMiller as sales disappoint

Investors expected more beer sales from the global lager giant, especially when compared with rival Diageo.

by Rachel Savage
Last Updated: 15 Sep 2014

Third quarter sales at SABMiller, the world’s second-largest brewer, disappointed investors, as volumes were held back by weak demand in Europe and North America.

SAB’s lager volumes grew just 1% in the three months to the end of December, holding total volume growth down to 2%. US sales to retailers fell 1.9%, while wholesale revenues dropped 2.2%.

The brewer, whose beers include Grolsch and Coors Light, said ‘challenging market conditions’ in Europe sent ‘net producer revenue’ (whatever that is – MT is no accountant) down 6% and lager volumes down 5%.

However, Europe wasn’t an entirely ‘unfavourable performance’ for SAB - British thirst for imported beers like Peroni Nastro Azzurro pushed UK volumes up 9%. Emerging markets also guzzled more – total volumes were up 13% in China, 5% in Africa (minus South Africa) and 3% in Latin America.

Investors were clearly expecting more quaffing though - shares fell as much as 2.5% in early trading, and were down 1% at midday.

SAB’s so-so performance contrasts with rival Diageo, whose beer brands include Guinness and Red Stripe. The winner of the Britain’s Most Admired Companies top gong last year had net sales growth of 6% in the year to June 2013 and volume growth of 5%.

Like SAB, Diageo is growing fast in Africa. Unlike SAB, Diageo has reported double digit sales growth on the continent, mainly fuelled by beer - revenues were up 13% to £1.5bn last year.

However, no one in the drinks industry seems to be able to party all the time. Last April, Diageo got a slap on the wrist from shareholders after posting weaker than expected sales growth. It could be SAB’s turn to get the rounds in next.

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