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Castle Lite a hit among drinkers

May 27 2012 12:58 Niël Joubert

Company Data

SABMILLER PLC [JSE:SAB]

Last traded 627.60
Change 5.38
% Change 0.01
Cumulative volume 1344961
Market cap 1.05tr

Last Updated: 30/09/2014 at 04:28. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - A couple of years ago seasoned beer drinkers might have looked at you askance if you ordered a Castle Lite.

But then Vanilla Ice came on the scene with his Ice Ice Baby, MC Hammer with his Can’t Touch This and there is the snowflake that turns blue to show that your beer is (ice)cold enough to drink.

Today this premium beer is one of South African Breweries (SAB’s) most popular, as proved by its latest results.

SAB says Castle Lite is currently the biggest and fastest-growing premium brand in South Africa and sales have grown a cumulative 68% over the past three years.

Although Castle Lite is not a true light beer – it contains 4% alcohol compared with the 3% or less of a true light beer – it does have a low calorie count.

According to SAB one of its biggest accomplishments is that it was able to alter beer drinkers’ mindsets: drinking a light beer does not mean you are a lightweight. The beer is served ice-cold, at minus four degrees Celsius.

Castle Lite is one of the reasons for SAB today having an almost 90% market share.

Managing director Norman Adami says he is delighted with SAB’s good results for the financial year to end-March, which were announced on Thursday. Its market share has grown in a highly competitive beer market with very erratic consumer demand, he says.

SAB is part of the world’s second-largest brewer, SABMiller [JSE:SAB], which announced its results for the same period on Thursday.

The global beer giant’s operations in emerging markets led to the excellent performance for this period.

Lager sales and profits have declined in developed markets, but increased in Africa and Latin America.

This year SABMiller’s total sales volumes amounted to around 286m hectolitres – 4% more than in the previous year. In South Africa lager sales volumes increased by 2% to 26.85m hectolitres.

In South Africa ebitda (earnings before interest, tax, depreciation and amortisation) rose 9% to $1.17bn.

Revenue (excluding that of new acquisitions) at constant exchange rates was 14% up.

Adami says the group suffered a major blow when it lost Amstel, as this had accounted for some 20% of SAB’s profits. SAB’s contract to produce, market, sell and distribute Amstel Lager came to an end in 2007.

Heineken, of which Amstel is a subsidiary, now distributes this beer in South Africa through Brandhouse Beverages.

But Adami says SAB has never looked back and most of its brands have since grown. The star has been Castle Lite, he says, but three-and-a-half years or so ago it was a different story.

This product then lost market share, as did Carling Black Label. But today both are growing owing to the repositioning of the brand names.

Adami says Black Label is one of the most underrated brands; it does well in blind tests and has won several awards.

“It's always regarded as the male blue-collar worker’s beer, but we have brought it up to date. Now it's an all-round man’s beer – it's no longer just for the working man, but the manly man.”

Adami says the group tried to fill the void left by Amstel with Grolsch, Millers and Peroni. The effort towards mass penetration and distribution “did not however boost the brand equity and three years ago we decided to start over with a more focused approach”.

Using this approach the company wants to make these global brands more exclusive, with a type of “super premium” branding above that of Heineken, he says.

It's a patient approach, but good progress is being made in this respect, says Adami.

 - Sake24

For more business news in Afrikaans, go to Sake24.com.

 
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