Flat sales prompt pressure warning from brewing giant

Brewing giant SABMiller warned of pressure on its US business today after sales fell flat and profits were hit by higher costs and price cutting.

Brewing giant SABMiller warned of pressure on its US business today after sales fell flat and profits were hit by higher costs and price cutting.

SABMiller, which is best known in Ireland for its Miller and Pilsner Urquell brands, said the North American market had deteriorated since it last updated the City in July.

Sales of Miller lager to US retailers reversed from 1% growth in the first quarter to stand 0.3% lower during the six months to September 30.

SABMiller said its US business was operating in “a trading environment that has become increasingly price-competitive and subject to higher input costs, both of which have affected profitability”.

Budweiser owner Anheuser-Busch went on the attack earlier this year by cutting prices and hiking the amount of money it spends on marketing its beer brands.

The merger of Coors and Molson also turned up the competitive heat across the Atlantic.

Despite the threats to its US profits, shares in SABMiller were supported by 5% growth in lager volumes across its all operations following particularly strong performances in Asia and Africa.

SABMiller said trading in Europe during the first half had mirrored its overall rate of sales growth.

Its biggest success story on the continent was in Poland where drinkers were consuming more of its beer than ever before and it now has a market share of almost 30%.

This performance in Poland complemented more moderate growth in most other countries in Europe, SABMiller said.

The trading update was delivered on the day that SABMiller completed a takeover deal worth $7.8bn (€6.5bn) to cement its position among the world’s biggest brewers.

The acquisition of Colombian rival Bavaria has given SABMiller a major footprint in Latin America, where beer volumes are set to grow at a compound rate of 4% over the next five years – double the growth rate for the global beer industry as a whole.

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