Results from the second-biggest brewer in the world.

HOGG: There's so much to love about our country - the rain that we've got here on the Highveld, I think pretty much all over the country, the KwaZulu-Natal Midlands - and even David Bullard, who helps us to laugh at ourselves.
    But something you've got to admire is one of our world-class businesses, which is now the second-biggest brewer in the world. It also owns the biggest-selling brand of beer anywhere in the world, and it's not Black Label or Castle - It's actually a beer called Snow, which is sold in China. Today the financial results were released by SABMiller plc, which makes it a busy day for the international group. But Malcolm Wyman, the group financial director, gave us a little bit of time earlier and I quizzed him about what was going on with the South African operations, which of course is what we want to know more about.

"MALCOLM WYMAN: I think in South Africa we are still seeing the consumer under pressure, and I think that that will probably remain for a little longer. And so, as far as our volumes are concerned, we were down 3% in this period. There's a lot of work going on in South Africa at the moment, where we are investing quite heavily behind our brands, particularly our mainstream brands, which are our core brands, but also behind premium brands and our international worth-more premium as well. So a lot of work is taking place in South Africa to try and counter the trends that we are experiencing there.

ALEC HOGG: For thirty years you've been pretty much unchallenged here. Heineken will be generating its first beer from the Midrand brewery later this year. Have you done anything different to position yourselves against this new threat?

MALCOLM WYMAN: Well, firstly let me say if there was anything that we had done which was going to be a very good position for us against our competitor, I'm afraid I wouldn't want to let you know about it right now. But certainly we are taking steps generally to ensure that our brand portfolio is as strong as we can make it. And it's nothing, really, to do with the brewery that is being opened right now, but more about the fact that we would wish to strengthen and maintain our market share in South Africa. We do have competition, and it is in fact with the brand that we built up over many years, so it is a strong brand that we are competing against. And, as I said earlier, a lot of work is taking place around our brand portfolio, but also around distribution and our routes to market.

ALEC HOGG: The battle, though, is going to be in the shebeens and the spazas, which are about three-quarters of the sales of your product here in South Africa. Is there much one can do to perhaps defend those positions?

MALCOLM WYMAN: Well, we do have very strong positions there, and we have been there for a long time. We have a large volume of product going through, and we have very strong positions with the shebeens and the tavern owners. So I think that for a competitor to come in is very difficult. We have strong relationships and a very strong distribution model, so we will continue to operate the way that we have, and I think it will be a challenge for our competitor to break in and compete against us.

ALEC HOGG: Generally the market in South Africa - you have got more competition coming in, but revenues were up, the profits up slightly. Just one point about your South African operation, the hotels and gaming side does still stick out like a sore thumb for a brewer. Profits were down by 12% in this half-year period. Are you re-assessing your ownership?

MALCOLM WYMAN: Well, we've said before that we are very happy with our investment in the hotels and gaming side. It is not part of our beverage portfolio - I think that's obvious. But certainly it is not our intention at this particular point in time to dispose of it. It is performing well and I think things are, as I said, difficult because of consumer pressures, and the hotels and gaming side has not actually escaped that. And certainly hotels in particular do feel the pinch when consumer markets slow down and business and leisure travellers stop moving around the country. But that hasn't caused us to rush out and look for a buyer. As we've said, we are very comfortable with that investment, and at this particular point in time we have not decided at all or have any intention of disposing of it."

ALEC HOGG: I had a good, long chat with Malcolm Wyman. If you are an SABMiller shareholder - and given that it's the fourth-biggest company listed on the JSE, the likelihood is if you own unit trusts or a pension fund you've got some of those SABs in it - the full podcast in on Moneyweb.
    You'll find David Bullard's story written there as well. It's called "Why toy guitars and footballs should also be banned". Obviously very tongue-in-cheek. But what is interesting is more than 60 people have commented under his article, some of them pretty intelligently too.

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