SABMiller Sees Latin America Sales Rising on ‘Affordable’ Drinks

SABMiller Plc predicts the volume and revenue of its beer sales in Latin America will rise as it attracts drinkers by selling more affordable beverages.

“We believe we can continue to deliver mid-single-digit volume growth and upper-single-digit revenue growth for the foreseeable future,” Karl Lippert, president of the Latin America unit, said today in a statement ahead of an investor meeting in London.

The maker of Aguila, Grolsch and Peroni said it will lure drinkers away from local spirits and illegal alcohol by providing “affordable alternatives.” It’s introduced larger bottles in Colombia for drinkers to share, and said it’s increased the amount of beer drunk as a percentage of all alcohol consumed regionally. The company anticipates a “nice-sized middle class” by 2020 onwards, Lippert said today. Low-income consumers are currently its key market in Latin America.

SABMiller generated about 33 percent of earnings before interest, taxes and amortization from Latin America, its largest unit ahead of Europe and South Africa, in the fiscal year ended March 31, 2012. Brewers are offsetting tough economic conditions in Europe and slow growth in the U.S. with sales in emerging markets such as central and Latin America.

SABMiller shares rose 0.9 percent to 3,447.50 pence at 1:55 p.m. in London trading.

Profit Margin

The company expects to increase profit margins in Latin America by 0.6 percentage point to 0.8 percentage point over the medium term from 2013, it said today. That compares with a forecast SABMiller made in 2011 for 0.6 percentage point to 1 percentage point. The narrowed range wasn’t because “we’re more pessimistic, just more precise,” Lippert said today at the meeting.

SABMiller said about 10 percent of its volume in Latin America is accounted for by so-called premium or super-premium beers, including Miller Lite and Miller Genuine Draft. Revenue per hectoliter will increase 3 percent to 5 percent in the mid-term in the region, where volume will advance 4 percent to 6 percent, the company said today.

The brewer had said in 2011 it expected Latin America volume to increase 5 percent to 8 percent in the medium term, with revenue per hectoliter rising 2 percent to 4 percent.

Larger competitor Anheuser-Busch InBev NV last year agreed to buy full control of Grupo Modelo SAB for $20.1 billion in a bid to fully access the fast-growing market of Mexico.

SABMiller’s Latin America lager volumes rose 4 percent in the first half ended Sept. 30, where revenue per hectoliter, excluding currency shifts, climbed 4 percent, the London-based company reported in November.

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