South America: SABMiller plc to invest US$1.8 billion in South America
SABMiller plc, one of the world’s leading brewers, announced on January 17 that it is investing approximately US$1.8 billion in its South American operations over 5 years, responding to higher than expected sales volumes and the significant profit growth potential in the region. The investment will finance upgrades to the group’s brewing capacity; point of sale improvements; the development of route to market networks; and new packaging which forms part of a brand renovation programme to enhance the appeal of the group’s beers to a broader base of consumers and across a wider range of drinking occasions.
As part of its investment in Colombia, SABMiller will replace over 700 million bottles and 25 million crates in a substantial project to drive both volume growth and category reappraisal. Strong volume growth in Colombia has already accelerated the investment of US$175 million in a new brewery in Cali, the country third largest city in the west of the country. Similarly in Peru, where SABMiller’s subsidiary Backus and Johnston has already announced it will invest US$102 million in the expansion of its facilities at Ate and Motupe, a further $12 million has been spent in the current financial year on fridges, coolers and trade equipment to improve the accessibility of cold product across the country. Further investment in capacity, point of sale development and route to market assets will continue during the investment period across the four markets in the region.
Speaking at an investor seminar in London today, Barry Smith, president of SABMiller South America, commented:
“This last quarter has seen another good performance from our businesses in South America, with volumes ahead some 12% on a pro forma basis, and up 11% year to date. This performance, and the smooth integration of the four new operations that has been achieved in the last year, gives me confidence that we will continue to make good progress towards developing our South American platform.”
At the time of its South American transaction in 2005, SABMiller said that it expected its investment in South America to cover its cost of capital in a 5-6 year timeframe.
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. Outside the USA, SABMiller plc is also one of the largest bottlers of Coca-Cola products in the world.
In the year ended 31 March 2006, the group reported US$15,307 million in revenue and profit before tax of $2,453 million. SABMiller plc is listed on the London and Johannesburg stock exchanges.
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