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SABMiller beer volumes rise

Jul 21 2011 13:56 Reuters

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London - Brewer SABMiller [JSE:SAB] reported a rise in first-quarter beer volumes led on continued growth in emerging markets, but kept the market guessing if it will sweeten its bid for Australia's Fosters.

The world's second-largest brewer and maker of Miller Lite, Peroni and Pilsner Urquell said on Thursday that underlying beer and soft drink volumes grew 5% year-on-year.

Price rises also helped the group to push up revenues in its April-June first quarter by 7%, it said in a trading statement.

The company said that the jump in volumes reflected growth in consumer spending in many developing markets, and a relatively weak comparative quarter in the prior year.

The world's No 2 brewer after Anheuser-Busch InBev added that its financial performance was in line with its expectations, as it made selective price rises across markets to offset a moderate rise in raw material input costs.

Last month, SABMiller launched a cash bid for Foster's Group at A$4.90 per share, or a total of A$11.2bn including debt. Although Foster's rejected the bid, analysts believe a sweetened offer may succeed.

With no obvious rival bidders, analysts say SABMiller would be able to pay more for Foster's with its half share in the Australian beer market, which despite slow growth has high profit margins as the market is a virtual duopoly together with Kirin's Lion Nathan.

SABMiller, which earns around 85% of its profits in emerging markets, has been helped by its low exposure to tough Western beer markets.

SABMiller and AB-InBev have benefited from growth in emerging countries, while other big brewers such as Heineken and Carlsberg have been held back by their larger exposure to flat European markets.

SABMiller, which also brews Castle, Snow and Aquila beers, said quarterly underlying volumes grew by 15% in Africa, 11% in Asia, 6% in Latin America and 5% in Europe. Volumes were flat in South Africa.

In the United States, where it formed the MillerCoors joint venture in July 2008, quarterly sales to retailers were down 2.7%.
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