Highlights

HOW MUCH DID SAB MILLER PAY FOR PABOD ?

A drive through Oginigba Road Port Harcourt would reveal quite a few positive changes, most noticeably the wider road with drainage built by the Rotimi Amaechi administration and commissioned by President Goodluck Jonathan. Companies like Mitchellin, West African Glass Factory and Pabod Breweries stand on Oginigba Road. Mitchellin pulled out of Port Harcourt a while back turning its vast estate into a ghost town. Pabod Breweries and West African Glass Factory once jewels of great value in the treasure base state went to seed in the nineties. Pabod Breweries started production in 1982. From 1983 to 1985, sales of the company rose to over three million cartons of Grand Beer and Grand Malt per annum. The company experienced a major drawback when in 1986 a government policy, the Structural Adjustment Programme (SAP) had an adverse effect on the importation of raw materials for the brewery which depended heavily on foreign raw materials. In addition, lack of proper management and corruption resulted in a closure of the brewery.
Subsequently, Pabod Breweries stayed dormant for many years before a German brewing consultancy, Brewtech, re-started the brewery with the help of the Rivers State government. The venture was temporarily halted when Nigerian Breweries NBL took Pabod to court on the claim that Pabod’s customized beer bottle looked like NBL’s Star bottle. On 30 June, 2008 Pabod won the case in court but NBL appealed the decision. The case is still pending.
In 2009, Governor Amaechi sealed a deal with Strategic Alliance JV 2, one of the subsidiaries of global beer company SAB Miller. By this deal SAB Miller became the majority share-holder in Pabod, acquiring the shares of Brewtech as well as some shares held by the Rivers State Government. Just how much did SAB Miller pay for eighty percent of Pabod Breweries ? The answer to that question seems to be a closely guarded secret. The Rivers State Government is yet to reveal how much it was paid by SAB Miller. This, at best is a terrible oversight and SAB Miller has steadfastly refused to comment on the issue. To sell Rivers State Government owned property and not give an account to the people violates the spirit of transparency to which the state government had committed itself. No doubt, Rivers State gained a yet to be specified amount of money, the return to business of Pabod Breweries and return of Grand Lager and Malt to the market. The deal also meant that Pabod Breweries would no longer be owned by the Rivers State Government, rather it had become a subsidiary of the second largest brewer in the world.
Ranked as the world’s second largest brewer in terms of volume, SAB Miller offers 200 brands of beer and operates 100 breweries across the globe; trailing only Anheuser-Busch Companies, Inc. SABMiller is the second-largest brewer in India and has joint ventures in Vietnam and Australia where it acquired the Foster’s brand. In China, the group’s national brand Snow is produced in partnership with China Resources Enterprise Limited. Snow is the leading brand by volume in China; SAB Miller is also the number two U.S. beer producer (US is world’s most profitable beer market) and Italy’s second largest brewer. SAB Miller owns through acquisition the Pilsner Urquell brand, the market leader (with a 44 percent market share) in the Czech Republic whose citizens consume more beer per capita than anyone else in the world.

Any hopes that the coming of SAB Miller to Pabod Breweries would turn Grand Lager or Malt into an international brand was dashed as soon as it became clear that the group’s main aim of buying a controlling stake at Pabod was to provide a soft landing for their South African brands in the Nigerian market. Using Pabod as its Nigerian subsidiary, SAB Miller is currently flooding the Nigerian market with Castle Lager and Castle Milk Stout, its leading brands in South Africa, also touted to be the best selling beer on the continent. They are selling at very competitive prices while Grand Malt remains a popular brand available in the local market. There has been a noticeable decline in the availability of Grand Lager the local favorite perhaps to create capacity for the production of the Castle brand at Pabod Brewery which currently is limited to producing 30,000 hectoliters of booze. The marketing strategy for the South African brewed Castle brands present these foreign brands as sisters to the Rivers Grand brand courtesy of Pabod. Castle Milk Stout is currently being brewed and canned at Pabod Breweries. It could mean that Grand is being carefully phased out or restricted to its local level. Since SAB Miller has controlling interest at Pabod, the group is not answerable to anyone on its decisions at Pabod as long as it is within the law of state and country. SAB Miller has also rolled out another brand of beer at Pabod. This new beer Eagle comes in a bottle.
SAB Miller is a global player and Pabod breweries must fit into its African and global commercial ambitions. That is the only plausible explanation for one of the biggest beer companies in the world to enter the Port Harcourt beer market by buying up Pabod. SAB Miller can bring great employment opportunities to Port Harcourt if its plans to upgrade Pabod works out fine. It can contribute to the growth of the Rivers and Nigerian economy by a commitment to clear corporate social responsibility goals. Bringing such a global player to the Rivers economy was no mean feat and should provide Governor Amaechi with a good example of what he has achieved from his travels to London if only he can make public the financial details of the deal. SAB Miller is head-quatered in London …1 Stanhope Gate, London W1K 1AF.
Amaechi’s efforts should pay off big time, if SAB Miller’s intentions are keeping faith with his. There are concerns however that though Pabod Breweries is now part of an international conglomerate, the Rivers brand for which it was known is not getting any exposure to SAB Miller’s international market despite the claims by SAB Miller organs that Grand Lager is among the best of SAB Miller’s two hundred brands of local and international beers. No doubt as a profit making company, SAB Miller reserves the right to its business decisions. Still, by taking over the brewery and not giving Grand Lager and Malt the opportunity to conquer its vast international market, by bringing its South African brand Castle to take over markets once dominated by Grand, SAB Miller might find itself doing good business but not championing the aspirations of Rivers people as Pabod was originally meant to do.
Although its head office is in London, SAB Miller owns no breweries in the United Kingdom. Its true home country is South Africa, where The South African Breweries Limited (SAB) was founded in 1895 and where SAB Miller today holds an impressive 98 percent share of the beer market. The firm operates seven breweries in South Africa, where it sells 14 brands of beer, including local lager Castle (the so-called best selling beer in Africa), SABMiller import brands Pilsner Urquell and Miller Genuine Draft, and one foreign brand brewed under license – Amstel. The company also maintains a major presence in the South African soft drink market through a 74 percent interest in Amalgamated Beverage Industries Ltd., the country’s largest bottler and distributor of the Coca-Cola line of products, and full ownership of Appletiser South Africa (Pty.) Ltd., a producer of non-alcoholic sparkling fruit juices. In addition, SAB Miller owns a 30 percent stake in Distell Group Ltd., the leading distributor of wines and spirits in South Africa, and 49 percent of Tsogo Sun Holdings (Pty.) Ltd., an operator of hotels and casinos in southern Africa.

Nigeria is potentially the largest beer market in Africa. Currently, it is second only to South Africa which is almost entirely dominated by SAB Miller whose South African subsidiary SAB Ltd is South Africa’s largest producer of products for the Coca-cola company. SAB Miller’s ambitions in Nigeria run far beyond the production of Grand Malt to carving out a huge stake for itself in the strategic Nigerian beer market dominated by its global competitors Heineken JV and Diageo through their partnerships with Nigerian Breweries Ltd and Guiness Nig. Ltd. According to Trevor Stirling, research analyst for European beverages at Sanford C. Bernstein (AB) in London, four main international brewers currently control nearly 90 percent of the African market: SABMiller has a 43 percent share vs. 19 percent for Heineken, 16 percent for French brewer Castel Group (in which SAB Miller owns a 20 percent stake), and 12 percent for Diageo. The Nigerian market is however dominated by Heineken and Diageo Guiness.

2 Comments on HOW MUCH DID SAB MILLER PAY FOR PABOD ?

  1. Very educative

  2. Ezemegwalu michael.c // July 7, 2012 at 10:25 am // Reply

    Anambarians had been buying and selling the fallacy that grand malt and its subsidiary is owned by mr peter obi.i only cleared the airwaves that the rumour is lie

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