SABMiller demand cooled by weather

Brewing giant SABMiller sprung a surprise on investors today by revealing that a string of rainy days in South Africa had watered down demand for its lagers.

Brewing giant SABMiller sprung a surprise on investors today by revealing that a string of rainy days in South Africa had watered down demand for its lagers.

The maker of Miller and Pilsner Urquell blamed “cool and wet weather” in South Africa during the summer month of December for limiting its overall growth in third-quarter volumes to 1.8%.

The underlying figure, which does not include the impact of its $7.8bn (€6.4bn) takeover of Colombian brewer Bavaria, was well below consensus forecasts in the City of up to 4% growth.

SABMiller said soft drinks sales in South Africa also suffered when the mercury fell, but it insisted that there was no long-term issue as the underlying economic performance and consumer confidence in the country remained positive.

Group beer volumes were squeezed further by falling sales of Miller lager to retailers in the United States where a fierce price war has been waging since the summer.

Budweiser owner Anheuser-Busch went on the attack last 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.

Acknowledging the “intense competitive pricing pressure” in its statement today, SABMiller said sales to stockists in the US were 1% lower after accounting for the reduced number of trading days in the third quarter.

But the trading picture was mixed across its American brands as retail sales of its flagship Miller Lite lager have continued to grow, the company said.

Analysts noted comments by Anheuser-Busch at the end of November that it intends to raise prices on the bulk of its volumes during the first few months of this year.

David Liston, of Barclays Stockbrokers, said: “The period of intense price competition may be over and it is reasonable to expect a good improvement in profits going forward.”

In Europe, SABMiller said volumes were up 4% in the third quarter to be in line with the growth rate in its financial year so far on the back of strong trading in Poland, Russia and Romania.

And the first signs that the Bavaria deal has met the expectations of bosses were evident in a 7% rise compared with last year between October and December.

SABMiller said: “This performance reflects continuing growth in Colombia and robust growth in Peru, despite including two fewer public holidays over the Christmas period in the current year.”

Listed on both the London and Johannesburg stock exchanges, SABMiller has 42,000 employees.

Outside the United States, the company is one of the largest bottlers of Coca-Cola products in the world.

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