SAB, Brandhouse in a froth over adverts

Round one

SAB says material promoting a new crate Brandhouse has made to carry 16 of its new 660ml Amstel bottles exaggerates the profit beer distributors make on the crate and falsely says the new crate is the same size as traditional, 12-bottle crates.

Brandhouse, a joint venture formed by SAB rivals Heineken, Diageo and Namibian Breweries, says an SAB advertising campaign for Carling Black Label refers to Amstel in a comparative way that is unfair.

SAB dominates the local beer market, the world's ninth largest, with a market share of about 90%, but its foreign competitors, who last week opened a brewery at Sedibeng, south of Johannesburg, are bringing the fight to home ground in a bid for the growing township premium beer market.

“These (complaints) are the lions in the ring sparring, sizing each other up,” said Julian Wentzel, the head of research at Macquarie First South Securities in Johannesburg.

“This is the first round of a title fight between the incumbent champion and contender.”

Size does matter

Brandhouse is dishonest to claim its new crate is the same size as a typical one, SAB says.

“The industry standard crate has a volumetric capacity of 29160cm³, while the new Brandhouse crate has a volumetric capacity of 38057cm³, or about 30% larger.

“In terms of floor space, the industry standard is 972cm² and the Brandhouse crate is 1193cm², or 23% more,” SAB says in its complaint.

Brandhouse says SAB is peeved to face competition.

“Our innovation was that in approximately the same cubic centimetres, we introduced more bottles per crate,” says Norman Reyneker, Brandhouse's corporate relations director.

Trade customers make more profit per case, he says, playing down SAB's calculations.

“In a bottle store, say you had 10 crates. That was 10 crates (of) 12 bottles. You will now have 10 crates (of) 16 bottles. That's the simple logic.

“You could go into endless calculations. We're making it efficient for customers.”

SAB's head of strategy, Harald Harvey, disagrees.

“We do not believe any of these statements to be true.”

Comparative complaint

Brandhouse has separately complained about ads for SAB's Carling Black Label. The “Bigger is Better” campaign contrasts Black Label — sold in a 750ml bottle — with a rival sold in a smaller green bottle.

“That is comparative advertising. It's unfair,” Reyneker says. “You don't have to go into much analysis to realise they're comparing their product with ours.”

The Advertising Standards Authority has not yet ruled on either complaint.

Heineken product Amstel was introduced to this country by SAB under a joint venture with Heineken until 2007 — and under SAB became the largest premium brand, with an annual consumption of 2,4-million hectolitres. It is now back and competes head-on with Castle Lite, also packaged in 660ml bottles and which SAB says (though it does not give figures) is now the biggest-selling premium beer.

In a market where as much as 85% of beer sold is in cheaper, returnable bottles, Brandhouse's local production of the 660ml returnable Amstel bottles, which began only last month, lets them compete with the bestsellers.

Premium township market

“That's where the high drama is going to be,” Wentzel says. In SA's key township market, a risk for SAB is that drinkers of brown-bottle Black Label switch to premium Amstel.

“Consumers are trading up from mainstream into more aspirational brands, whether beer or clothing or cars ... that's the kind of market Amstel has entered,” Brandhouse spokeswoman Priscilla Singh says.

The skirmish over advertising is part of a wider battle that will be fought with all the grace a beer company can muster.

SAB lodged its complaint with the authority on 10 March 2010, but announced it only last Wednesday, a day after Brandhouse made its own complaint — and the day before Sedibeng's official launch.

Source: Business Day