Sabmiller plc is a company formed by the 2002 merger between South African Breweries Ltd and the Miller Brewing Company of the United States. South African Breweries Ltd was founded as Castle Brewing in Johannesburg in 1865. The name was changed to South African Breweries Ltd (SAB) 2 years later, when the company was floated on the local stock exchange.
The introduction of apartheid in South Africa in 1948 included a prohibition on alcoholic beverages for the indigenous black population (lifted in 1962). This collapsed the domestic market, and in 1949 SAB initiated a massive expansion program outside South Africa, starting breweries in Bulawayo, Zimbabwe’s second largest city, and in Zambia. By 1955, SAB had built a new brewery in Johannesburg, but this coincided with the government’s introduction of a heavy beer tax. This led to a drastic fall in consumption and to pressure for the South African brewing industry to consolidate. The result was the acquisition by SAB, in 1956, of its brewing rivals Ohlsson’s and Chandlers, which gave SAB a virtual regional beer monopoly. Between 1964 and 1966 SAB was granted licenses to brew Guinness, Amstel, and Carling Black Label, and in 1973, it built additional breweries in Botswana and Angola.
In 1990, when the ban on political parties was lifted in South Africa and when markets behind the Iron Curtain opened up after the 1989 fall of the Berlin Wall, SAB’s annual production exceeded a substantial 32 million hl (27,269,373 US bbl). This put SAB in a position to consider acquisitions outside Africa. The first European acquisition was the old Dreher Brewery in Budapest, Hungary, which it took over in 1993. This was followed by a shareholding in the Czech Plzeňský Prazdroj (Pilsner Urquell) in 1994 and that brewery’s outright purchase in 1999. In 1995, SAB purchased a majority stake in Lech (Poland), which has been wholly owned by SABMiller since 2009. By 2001, SAB’s global production reached 77 million hl (65,616, 928 US bbl), with 42% of this volume produced outside of South Africa.
As of 2010 other European SABMiller holdings included Birra Peroni in Italy, SABMiller RUS LLC in Russia, Pivovary Topvar in Slovakia, Grolsch in The Netherlands, Sarmat in Ukraine, and Ursus in Romania. The company’s structurally most significant acquisition, however, came in 2002 with the purchased of the US-based Miller Brewing Company from Philip Morris Corporation for USD$3.6 billion, to become the world’s second largest brewer. This was the precursor to further joint ventures and acquisitions, particularly in emerging markets.
One of the main SABMiller targets was the burgeoning Asian markets. SAB had been in China since 1994 through a joint venture called China Resources Snow Breweries (CR Snow). In 2004, CR Snow acquired the Chinese brewing interests of Lion Nathan. In 2006, it added breweries in Dongguan, Lanzhou, Harbin, Yanjiao, and Nanjing, followed by the 2007 purchase of Blue Sword, SABMiller’s largest China acquisition. In 2009, CR Snow continues to expand with the acquisition of breweries in Anhui, Liaoning, Zhejiang, and Shandong provinces. SAB made its first foray into the fast-growing Indian market in 2000 with the purchase of the Narang Brewery. The resulting SAB subsidiary Mysore consolidated its position in 2003 by taking over Shaw Wallace to become India’s second largest brewer. Another joint venture came in 2006 with Vinamilk in Vietnam, where SABMiller invested in a greenfield brewery with an annual capacity of 5 million hl (4,260,839 US bbl).
Elsewhere, SABMiller was not idle either. In 2005 it acquired a majority interest in South America’s second largest brewery, Cerveceria Bavaria, of Colombia. This built on SAB’s 2001 entry into Latin America with the purchase of Cerveceria Honduras. And in late 2010 SABMiller purchased Argentina’s Isenbeck brewery from Germany’s Warsteiner.
In North America, in 2007, SABMiller announced a distribution joint venture with the Canadian-American brewing group Molson Coors Brewing Company to form MillerCoors, which now manages the portfolios of both groups in North America from its new headquarters in Chicago.
In 2009, SABMiller’s global production was 210 million hl (178,955,260 US bbl) with revenues of USD$24.53 billion, making SABMiller the world’s second largest brewer after Anheuser-Busch InBev.
International directory of company history, January 1, 2004. SABMiller report, 2010. SABMiller.com. Reuters, May 2010. The Star (SouthAfrica). November 14, 2008.
International directory of company history, January 1, 2004.
SABMiller report, 2010.
SABMiller.com. Reuters, May 2010.
The Star (SouthAfrica). November 14, 2008.