Europe: SABMiller is setting out an aggressive strategy to "steal share" from rivals in Europe

Global brewing giant SABMiller Plc is setting out an aggressive strategy to "steal share" in Europe from its arch-rivals and continue to outperform a beer market now showing slowing growth, Reuters commented on September 28th.

The world's second biggest brewer is either first or second in most of the markets in which it operates in Europe, and is planning to drive beer volumes up five percent a year in future despite maturing markets in its eastern heartland of Europe.

The London-based brewer's main European businesses are in the east, brewing Pilsner Urquell in the Czech Republic, Tyskie in Poland and Ursus in Romania, but recently industry growth in its eight European markets has slowed to 1 to 3 percent a year.

"Mid-single figure percentage volume increases are what we look to achieve and we will look to do this principally by share steal from the multi-nationals and local regional players," Alan Clark, managing director of SABMiller's European region, told Reuters in Budapest earlier this week.

Europe is the group's third biggest regional profits earner after South Africa and Latin America, and is group's fastest growing profits region which includes Poland, the Czech Republic, Slovakia, Hungary, Romania and Russia in the east together with Italy and the Canary Islands in western Europe.

Past industry volume growth has averaged 6 to 10 percent across these eight markets, but the beer industry has reached maturity with SABMiller's six east European markets now almost matching beer consumption level per person in the west.

However, Clark is still bullish based on the group's ability to outperform its rivals since it first moved into Europe with its acquisition of Dreher in Hungary in 1994.

"We have outperformed the market for a number of years. We are not arrogant, but we have a good strategy," he said.

SABMiller's rapid expansion has seen it move to number one position in Poland, the Czech Republic, Slovakia, equal first in Hungary, number two in Romania and Italy to Heineken and a distant number five in Russia.

This came as part of a rapid rationalisation of the east European brewing industry which was opened up after 1989 with SABMiller, Heineken, InBev and Carlsberg typically taking 80 percent-plus between them of these markets.

Clark said SABMiller had a 19 percent share of these eight European markets compared to Heineken's 19 percent with InBev and Carlsberg trailing. SABMiller takes the lead with a 49 percent share of the Czech market, 41 percent in Slovakia, 37 percent in Poland and 28 percent in Hungary, he added.

Beer consumption levels in SABMiller's Europe, which is home to 290 million people, is now up to 80 litres per person per year, when excluding the low beer-drinking Italy, and close to the west European average of 85 litres.

But again Clark points to SABMiller's record as the most profitable beer company in the countries where it operates in Europe as it has driven in-country efficiencies and cut brands to give a tight brand portfolio.

"Typically we have the largest mainstream and local premium brands in countries such as in Poland, the Czech Republic and Italy," he said. Poland and the Czech Republic are the group's most important markets in Europe in terms of volume and profit.

This gives the brewer the top mainstream brand in Poland with Tyskie and local premium beer with Lech, and also with Gambrinus and Pilsner Urquell in the Czech Republic.

Clark also see growth in markets where it is not number one, such as Romania where it is second to Heineken's 25 percent and Russia with its lowly 5 percent share from just one brewery. "We can win share of throat first from the multi-nationals and second from the local regionals which generally have a footprint of 15-25 percent," Clark said.

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