Hungary: SABMiller unit to spend EUR 28 mil on plant upgrade

Dreher Breweries Ltd., the Hungarian subsidiary of SABMiller, which is one of the world's largest brewers, is planning a HUF 7 billion (EUR 27.9 m) investment in 2007 to expand production capacities, improve quality and step up efficiency at the plant, Portfolio published May 18.

Dreher, which currently operates with a 700-strong staff, has no choice but to improve its efficiency, as several cheap beer brands appeared in Hungary in the past years and margins were crunched by heavy taxes, Chairman-CEO Hector Gorosabel told business daily Világgazdaság on Friday.

Last year's massive investments and current developments show that the parent company, SABMiller, has long-term plans with its Hungarian unit, Gorosabel added.

He noted that last January's excise tax hike on alcoholic beverages (20%) and another increase in September (7%) had a hugely negative impact on breweries, which were unwilling to pass these increased burdens onto consumers, Gorosabel said.

High energy prices and increased raw material prices also caused problems for producers. While beer consumption has not declined, consumers started to switch to cheaper products, he noted.

Gorosabel ses hardly any chance for acquisitions on the Hungarian market, since 86% of the sector is ruled by three major brewers.

SABMiller boosted sales volumes by 7% yr/yr in Hungary in the first quarter of 2007, outperforming the market. "This performance was achieved against a backdrop of significant fiscal austerity measures impacting consumers, a 20% excise increase, and competitor discounting," the company said in its preliminary Q1 earnings report.

About SABMiller

SABMiller plc is one of the world’s largest brewers with brewing interests or distribution agreements in over 60 countries across six continents. The group’s brands include premium international beers such as Miller Genuine Draft, Peroni Nastro Azzurro and Pilsner Urquell, as well as an exceptional range of market leading local brands.

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