Gauteng may be South Africa’s biggest beer market, but the current moratorium on granting new liquor licences in the province could hurt would-be tavern owners.
Speaking in an interview on Summit TV, Norman Adami, managing director and chairman of South African Breweries (SAB), said although the South African subsidiary of SABMiller was engaging with the government, the lack of capacity was frustrating.
“We want to see a healthy industry that is normalised, but in order to have a healthy, normalised industry, you need to have an appropriate number of licences to serve the broader society,” said Adami.
He compared South Africa to Poland and Colombia, which have similar figures for gross domestic product per capita and population size.
Colombia has 480 000 licensed liquor outlets and Poland more than 300 000, but South Africa has only 60 000, which suggests there could be as many as 180 000 unlicensed outlets alongside the country’s legitimate resellers.
“It’s very much a vestige of the past — an overhang from the Nationalist government,” Adami said. He added it was a form of “reverse discrimination”, and that although SAB did not expect to sell any more or any less beer in the short to medium term as a result, the industry needed certainty to attract long-term investment.
“The previous government tried to police the shebeens out of existence for 40 years without success. Why would this government be any different from the last?” he said.
This year, SABMiller’s interim results for the six months to the end of September showed an 11% increase in earnings thanks to growth in emerging markets. In South Africa, SAB grew revenue by 10% to almost $2,7bn, with earnings up 13% to $446m.
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The global brewer expects emerging markets to account for most of its growth over the next few years. “The prognosis is good for the emerging markets — there is underlying strength, there is every opportunity for growth,” said Adami.
He was also confident the portfolio would be enhanced by SABMiller’s purchase of Foster’s, the Australian brewer.
“The underlying economics in that part of the world are positive — the opportunity to grow is through applying our way of doing things.”
In the US and Europe, earnings before interest, tax, depreciation and amortisation moved down 6% in the period.
