SAB Miller: Strategy Analysis and PEST

INTRODUCTION

SAB Miller is a South African making company and it is the second major brewer on the globe, with sales and distribution across six different continents. SAB Miller with large brand collection, both international high quality beers to local brands it includes come a long way, weathering turbulent times and political crisis. It is also one of the greatest bottlers for Coca Cola.

VISION AND Quest ON THE GROUP

VISION

To be the most popular company in the global beverage industry

Investment of choice

Employer of choice

Partner of choice

MISSION

To own and nurture local and international brands that are the first selection of the consumer

VALUES

  • Our people are our long lasting advantage
  • Accountability is clear and personal
  • We work and win in teams
  • We understand and respect our customers and consumers
  • Our reputation is indivisible

CORPORATE STRATEGIES EMPLOYED BY SAB MILLER

SAB Miller being one of the oldest (100 plus) making company it had marvelous experience in the brewing field and the strategies used by SAB Miller are grouped the following
  • Political
  • Acquisitions and mergers
  • Wide portfolio
  • Brand value

POLITICAL

SAB being oldest brewing company in South Africa it was battered by politics crisis through the 20th century. It has emerged as a firm with building its functions in rising and mature markets. During 1948 anticipated to racist system of "Apartheid", there is opposition to the company. SAB also found various other pushes during this time period they are
  • Business limited to the united states only
  • Restrictions on employing international companies
  • Investing in or trading with South African companies
  • SAB developed solution in order to adhere to Government restrictions they were:
  • In 1950, SAB relocated its HO from London to Johannesburg.
  • Focused on development largely in southern elements of Africa and South Africa
  • Dominating the neighborhood market and home beer production
  • Expanding its product portfolio
  • First company to hire the code of non-discriminatory employment
  • In 1970 SAB became completely incorporated in South Africa and by the entire year 2000, it dominated the South African market to such an magnitude that 49 of every 50 beer consumed were brewed by SAB.

IMPLICATIONS

Due to the political conditions in South Africa SAB experienced very less room of doing business internationally, but these restrictions helped them to make a monopoly in South Africa. It owned or operated a 99 percent market talk about here. In addition, it incorporated its head quarters to Johannesburg, which helped it develop its market in Africa. Employing non-discriminatory code of employment helped it to get public support. It broadened its portfolio by purchasing local breweries and started producing locally brewed Guinness, Amstel, and Carling dark-colored label.

ACQUSITIONS AND MERGERS

Due to the constraints on local companies by the federal government, SAB had to stay in for the neighborhood Southern African market. Dominating the local market and removing competition was the goal of the company at that time and it was achieved by acquiring other local breweries and distribution facilities and by rationalized creation. SAB also obtained the licensing of locally brewed Guinness, Amstel and Carling dark label.

SAB made major acquisitions immediately after when the imposed constraints were relaxed credited the finalized process for establishment of your multiracial democracy in 1990.

SAB bought Stellenbosch Farmers Winery in 1960.

In 1993, SAB purchased Hungary's greatest brewery, Dreher that opened new door for even more developments into central Europe

In 1994, SAB in jv with Tanzanian federal government it revitalized the brewing industry and also in countries like Zambia, Mozambique and Angola, SAB provided boost to creation and circulation.

During the 90's SAB established operations in China, Poland, Romania, Slovakia, Russia, and Czeck Republic.

Acquiring 100% stakes in the Miller making company in 2002 was one of the most significant acquisitions created by SAB and becoming SAB Miller in the process.

Licencing of shebeens and releasing them in retail mainstream.

SAB Miller also bought out its jv spouse in India.

SAB Miller in 2005 merged with South North american brewer Grupo Empresarial Bavaria.

IMPLICATIONS OF ACUSITIONS AND MERGERS

SAB controlled an estimated 99% of the marketplace share in South Africa and possessed dominating positions in Swaziland, Lesotho, Rhodesia and Botswana.

SAB could diversify their business through joint ventures.

Due to fragmentation and small-scale business in Europe and Asia SAB could create profitable and fast growing business.

Launched quality products than their rivals for which the consumers was required to pay more.

SAB advertised their high quality brands.

Developing countries have growing economies thus beginning entry doors for attractive marketplaces.

SABMiller sends in both technological and distribution groups for inspection before it gets into the market

Scare of HIV pandemic cost SAB costly labor, reduction in productivity

SAB business disperse provided them with stock portfolio business

With volatile market in growing economies where in SAB incurred majority of its income, it got indirect impact in self-confidence of SAB in these countries.

SAB outlined itself on LSE to give raise to its infrastructure.

Share price drop by 15. 5% in accordance with FTSE 100 in the year end Nov 2000

Acquiring Miller Making Company made it second greatest brewer on the globe.

SAB could balance out loss in a single country with income far away.

Expanding development capacity and boosting the grade of product in India.

Dip in show price of SAB Miller after acquiring Miller Brewing Company.

Introduced new product packaging with new sales and circulation system and improved the flexibility of these production facilities.

SAB Trained around 6000 newly licensed taverniers running a business skills.

SAB presented broader and segmented brands

SAB gained strong and profitable market in South America; profits travelled up by 25%.

PORTFOLIO EXPANSION

SAB Miller brewing company is the next largest making company and has a broad portfolio globally, they have over 200 types of alcoholic and non-alcoholic beverages, produced and distributed. The major top quality brands are Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft, and Grolsch.

They started their expanding its collection by gaining control over Stellenbosch Farmers Winery in 1960.

Between 1960's- 70's it obtained permit to brew locally Guinness, Amstel and Carling dark-colored label.

In 1987, SAB purchased Lion Match Company.

Re-launch of Miller geniuine draft with high end placement of mainstream market.

Launch of Peroni Nastro Azzurro.

EFFECT

Dominating the Southern African Market

Leading match production in South Africa

Better market position

Increase in sales

Profitable development and distribution

Capture of demographic market

Competitive edge on the earth stage

Improvised marketing, sales and distribution

Annual statement emphasized the importance broader portfolio in the company's corporate and business success.

PEST ANALYSIS

PEST research of a business is an important part of strategic planning, as it looks at the external environment where the firm manages.

PEST examination helps company to build up strategies. The factors taken into account are

Political

Economic

Social

Technological

Political Factors

Under Politics factors we've is the federal government regulations on procedures of a firm or company.

For SABMiller the next factors apply
  • South African authorities regulations
  • Crisis scheduled to racism
  • International working and trading restrictions
  • Employment laws

Economic Factors

Economic factors include exchange rate, taxation, market progress trends, GDP, throw-away income, inflation, creation volume, etc

In SABMiller's case, the following apply
  • Volatility of the exchange rate in developing countries
  • Economic expansion in growing worlds
  • Listing on LSTE
  • Acquisition of Miller Brewing Company
  • Sensible product pricing
  • Production and distribution costs
  • Resource and labor cost
  • Labor unrest

Social Factors

Social factors include the demographic and ethnic aspects, health insurance and living standards, inhabitants shifts and so on.

In case of SABMiller

  • Change in use pattern
  • Attachment to locally brewed beer
  • Consumers becoming heath conscious
  • Class structure

Technological Factors

Technological factors include new technology, improvised tools and techniques, communication etc. It can lower barriers to access, can lower down minimum efficient creation levels, and effect outsourcing decisions.

In SABMiller's case are as follows
  • Research and development
  • World school Automation in producing countries
  • Production and distribution expertise
  • Technology improvements

Q&A

1. Identify the corporate logics that SABMiller have adopted during the period of the truth.

As reviewed above SABMiller has designed various strategies in order to be a leading brewer, they are

Dealing with political rules and regulations

Acquisitions and merger on a worldwide scale

Broader portfolio

Business in developing economies e. g. China, India

Repositioning and re-launching of products

Buying managing stakes in recently privatized brewery

2. Strategy

a. Explain the strategic position that SAB sees itself in 2007.

As explained SABMiller has good proper position aside from fierce competition by Anheuser-Busch.

Dominating positions in Southern African and Southern American market segments with good market talk about in Europe

SAB has broadened internationally especially in Central and Eastern Europe, China apart from Southern part of Africa. They have businesses in over of 18 countries with 30 breweries, with capacity 30. 5 million hectoliters capacity and 22 sorghum beer with 8. 5 million hectoliter capacity thus can create major market in these countries.

Though SABMiller lost the bid to obtain Harbin Brewery to Anheuser-Busch, it had competitive market in China with market development by 6-8 percent per calendar year.

With wide portfolio, SABMiller was able to catch the demographic market.

SAB was able to balance out loss in one country with earnings in other countries.

With growing economies in producing countries, there is increase in throw-away income, which gave method for better market share and earnings with attractive pricing.

Even though SABMiller had a few issues with talk about price drop scheduled to list company in LSE and acquisition of Miller Making Company, stakeholders must have a firm perception in the SABMiller as it a FMCG company. The chance of losing talk about value is exceptional and with globalization of the business, the probabilities are high success and higher dividends to shareholders.

  1. Acquisition of the major breweries and winery has helped SAB in dominating as well as having monopoly in countries
  2. SABMiller had a strong and wide collection with start of new products and attractive costs, creating strong demographic market and flexibility in the system.
  3. SABMiller could use its world-class technology and operation expertise to build up market in continents and also SABMiller delivers in both technical and distribution teams for inspection before it gets into the market

Africa - Has around 99% market show in South Africa and dominates in the others of Africa.

Asia/E. European countries - Has breweries is Asia pacific but with fierce competition and expansion of market in India. Good market show in Russia, Romania, and Czeck Republic and with acquisition of Hungary's brewery Dreher which paved way for further trends in European countries. However, the future here remains uncertain until any major dominate is completed.

Latin America - Merger with Grupo Empresarial Bavaria 2nd largest brewer in South America consolidated SABMillers position.

4. Acquisition of Miller Brewing Company is the one major offer by SAB and becoming 2nd most significant brewer, but has a tough time because of stiff competition by Anheuser-Busch.

5. SABMiller has a solid and varied business with extensive portfolio that will in the end pay off as it creates a demographic market and versatility in functions.

6. Jv with Grupo Empresarial Bavaria 2nd major brewer in SOUTH USA opened gates in Latin America, with lower investment and creating opportunities for itself

3. Based on your research, recommend the strategy that SAB should follow.

In my opinion SABMiller must develop their markets is Asia i. e. in China, India, and Asia Pacific. Though the market remains volatile, the chances of earnings making are high. SABMiller must look forward to acquire Harbin brewery in China, as the marketplace growth rate is 6-8 percent per calendar year. SABMiller must try acquiring majority stakes in Bavaria brewery, as there is development in market.

SABMiller can dominate the local market and develop excellent procedures by acquiring breweries with low performance, but with dominating market tell its competence in production, circulation operations.

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