South Africa: AB InBev says alcohol consumption sinks due to rising fuel costs and VAT hike

Anheuser-Busch InBev (AB InBev), the world’s biggest brewer, whose flagship brands include Castle Lager and Budweiser, said on March 25 that South Africa’s booze consumption sank last year as rising fuel costs and the VAT hike put pressure on cash strapped consumers, the Independent Online reports.

The company said in its 2018 annual report released on March 25 that top and bottom line performances were below its expectations in Argentina, Brazil and South Africa, largely as a result of a weak macroeconomic environment putting pressure on the consumer in all three markets.

It said the macroeconomic and consumer environment in South Africa were challenging last year.

“The VAT increase as of April 1, 2018, numerous petrol price increases and rising unemployment levels continued to have a negative impact on consumer disposable income, which put disproportionate pressure on the core segment where our portfolio is over-indexed,” the company said.

It said its premium portfolio continued to grow by triple digits and it gained 10 percentage points of market share in the growing high end segment this year.

“In the core segment, which still accounts for the vast majority of our volumes and was held back by a challenging macroeconomic environment, our share remains broadly unchanged, and toward the end of the year we saw an improved performance in volume,” it said.

AB InBev, which operates in nearly 50 countries with 500 brands, said in the report that it had empowered both its small entrepreneurs and its suppliers with advanced business capabilities and access to new commercial opportunities, leading to the creation of more than 2400 jobs.

“This contributes to South African Breweries’ goal to create jobs through enterprise and supplier development, helping drive inclusive economic growth and development,” the company said.

In terms of brand growth, the group said Budweiser revenue has jumped 5.3percent globally and 10percent outside of the US, driven by continued expansion into new geographies and the activation during the 2018 Fifa World Cup Russia.

It said Stella Artois continued to see strong, balanced growth, up 5.2percent globally, driven by its increased penetration of the meal occasion.

“Corona leads the way as the most premium brand among the three, growing double digits for the fourth consecutive year, with revenue up 17.6percent globally and 28.5percent outside of Mexico,” it said.

Last year the group successfully launched brands Castle Free in South Africa.

AB InBev said it had supported Cape Town in its pressure management project to save 4.5million litres of water per day last year.

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