Brewing industry 'has room to consolidate'

There is still room for consolidation in the brewing industry as a number of brewers controlled by trusts and foundations could be snapped up by the major brewers including SABMiller, chief financial officer Malcolm Wyman said yesterday, 12 May 2011.

"The industry may seem consolidated now but there is still some consolidation that can take place over the next five years. China would be first on that list," Wyman said.

SABMiller would work towards becoming a fully integrated company in line with the likes of Procter and Gamble, Nestlé and Coca-Cola.

Speculation that SABMiller could be on the acquisition trail has been fuelled by a recent Goldman Sachs report that it was best placed to take advantage of mergers and acquisition opportunities.

The report names Australia's Foster's Group as a possible target and French drinks group Castel, which it says would enhance SABMiller's position in the industry.

Wyman said the company was happy with the Castel partnership and refused to comment on the speculation.

Absa Investments' Chris Gilmour said there was plenty of scope for consolidation, especially in places such as China and Romania, where demand is rising. "Consolidation will allow more control over pricing," Gilmour said. "In China, major consolidation will be needed to see profits in line with volume growth."

China Resources Snow Breweries was established in 1993 and became a joint venture with SABMiller in 1994.

Since then the joint venture has been acquisitive, expanding first in the northeast before entering other territories.

Source: Business Day