South Africa: SABMiller invests in premium brands

The acquisitions of Blue Sword Brewery and Miller Beer in 2001 and 2002, respectively, have helped push SABMiller into the number two position among brewers (by volume) worldwide. It's hard to find a place in the world that doesn't sell a beer made by the company. Yet SABMiller's traditional shortcoming has been in selling to the elusive premium market; the company has, for years, prided itself on making beers for the masses, whether they are in Latin America, Asia, America or Africa. But that's all set to change, the Business Week has posted May 16.

South Africa, generally, may be a poor country, but the citizens are willing to splurge when it comes to beer. SABMiller's cheaper beers have reached a plateau in sales; the premium brands are selling so well that SABMiller just acquired Italian Peroni Nastro Azzurro beer, a European brand the company reintroduced as standing for all the things we love about Italian brands: high-fashion, sexual allure, and premium price. This beer, together with Miller Genuine Draft and its Czechoslovakian addition Pilsner Urquell (acquired in 2003), is another high-end brand that would seem to be out of reach for the average cash-strapped South African. Nonetheless, in what seems like a move contrary to common sense, SABMiller brazenly announced in March that it is set to launch a US$ 50 million global brand campaign built around the Peroni offering, proving that it is willing to spend the money in order to become a heavyweight contender in the premium beer game.

The expansion of premium brands in South Africa reflects the same trend worldwide. SABMiller has 75 percent of the premium market in South Africa through its sales of Miller Genuine Draft, Pilsner Urquell, Peroni, Amstel and Castle Light Lager. The statistics indicate that SABMiller is proving its naysayers (who believe its beers are too pedestrian for more refined tastes) wrong. Critics point out that 93 percent of SABMiller's sales were at the low end of the beer market until about 2002. Now, SABMiller will use its four premium brands to establish itself in the mind of the consumer who wants a little more from a beer. This is crucial, because as of right now SABMiller's hold worldwide in the premium beer market is "significantly less" than 75 percent, Reinders says cagily. It's a figure that might be as low as ten percent of the entire sector, say some observers. But the company is planning on changing that.

Reinders says the first step is to "build a desire among the right target audience before you expand." This is managed "by distributions and promotions to create the right cachet." And this also means that while television advertising is useful, it is in no way "the primary vehicle" through which a premium beer brand is built. The key is to "bring the brand to life in a way that people can interact with the brand." In this case, Peroni helped sponsor the Milan Fashion Show to help build its association with design and style. "It's down to your promotion and its innovation," Reinders says. In Peroni's case, SABMiller is specifically promoting "Italian style."

The beer is already available in some outlets, but the big push is about to come. Reinders says that it "could be" that SABMiller will build a "House of Peroni" on one of the fashionable boutique areas of Cape Town, much like the store built on upmarket Sloane Street called Emporio Peroni in London when the brand was relaunched a year ago. (SABMiller now has its head office in the UK.) This boutique, which was professionally decorated but had only one bottle of beer in the window, was so high end that no customers were allowed inside. They were only allowed to gaze longingly at the bottle and at a svelte model beside it. The move was supported by a series of Fellini-esque advertisements. Reinders says he is not going to reveal plans, but concurs these style ads will probably find their way to Cape Town.

James Crampton, SABMiller UK's media relations manager, reiterates that the trend toward premium beer brands offers an unrivalled opportunity for beer companies to move forward with swishy brands like Peroni. The Peroni initiative is "the first time a big idea has been rolled out internationally," starting in the UK (April), then to the US (May), to South Africa (June) and then the rest of Europe.

SABMiller regards public initiatives like Emporio Peroni and the accompanying campaign, as part of a bigger "toolkit of materials for people to choose their campaign strategy." The key, says Crampton, is to promote the beer as "stylish, Italian, and light; attractive to both men and women and appealing to a stylish culture." Beer makers, he claims, have "more and more consumer touchpoints" because of the global appeal of beer and better marketing campaigns than days past. According to Crampton, SABMiller is trying to "build brand equity by making consumers want to be immersed in the brand."

SABMiller, because of its brands' traditional low-end appeal among consumers, is a "broad facing" company, Crampton says. The clever Sloane Street boutique was designed to equate the beer not with other premium beers, but with stylish Italian brands like Versace and Gucci, giving Peroni an instant and authentic "association with style and fashion." On the back is what Crampton calls the "collaterals," other marketing stunts designed to draw attention to the brand as a fashion icon. (This includes the show held in 2005 on the Millennium Bridge, London, to coincide with Fashion Week. Organized by Peroni, the stunt brought haute couture to the man in the street in the form of the Collezioni Peroni, a "conceptual" display designed to draw associations between the beer and high fashion that highlighted the work of a series of up and coming designers.)

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