For Subscribers

Get the complete article now!

TWST: We spoke about a year ago and there’s been significant change at SABMiller (London: SAB.L) since then. Can you bring us up to date?

Mr. Chaloner: The major and most significant change of the company, of course, is a change of name, which acknowledges the acquisition last July of the Miller Brewing Company in the United States. That has really totally transformed what originally was known as South African Breweries into the second largest brewer by volume in the world and clearly a very significant player in one of the biggest beer markets in the world. And I am saying one of the biggest beer markets because, in fact, China is shortly about to become the biggest beer consuming market in the world, although the United States remains the most profitable. So Miller really is the big story of the year and, not unsurprisingly, with an acquisition of that size, there is going to be a lot to do in terms of integrating the business, understanding the business and indeed making changes to the business, which we have started to do just recently in the last few months with not only changes in terms of restructuring and closures of the small brewery, but also at very senior management level; just a couple of weeks ago, there was a change of president of Miller Brewing with our SAB Norman ADAMI taking over from John BOWLIN.

TWST: Can you tell us how that integration is going so far and how long you expect it to take to turn Miller around?

Mr. Chaloner: We have indicated that we expect at least 50 million dollars of savings to come from the integration work and we think that’s a fairly conservative figure. There probably will be more, as we work through things. Since July, we’ve had 11 integration teams working in Miller on projects from IT through to operating and procurement and those integration teams are beginning to draw their thinking to a close and in the next month or so we expect to see the actual programs begin to roll out in terms of the specific activities. Now our intention is, on May 23rd t when we announce our preliminary full year results, to also advise institutions and shareholders of the progress the integrations teams have made. With that said, back in November 2002 our chief executive indicated at that time that he expected an 18 month time scale to begin to see the turnaround that we all hope for with Miller.

TWST: How has the acquisition been initially received by the investment community? Were there concerns or was the rationale well understood?

Mr. Chaloner: There were some concerns. I mean, we were very well aware of them because we went into the Miller acquisition with our eyes open. The rationale for the purchase was to get into the biggest most profitable beer market in the world, to gain access to Miller’s brands, which we are planning to use in some of our other markets, to equally gain access in the United States to Miller’s distribution the Czech Republic. But again, we went in with our eyes open and therefore we knew that Miller was faltering and its core brands, particularly the Miller Lite brand, was showing a decline. We know we have to address that. We have some quite robust plans in place to address and change the position of Miller Lite in terms of its volume sales and some of those are already appearing in the market with redesigned packaging, and some advertising which is really now beginning to bite. There are some signs, albeit very early signs, that would suggest some things are changing there, particularly the Miller Lite brand. I think the main issue, to cut directly to your question, was people understood the rationale, people were very excited about what was being done, and I think people were pleased to see a company with the reputation that SAB had taking on Miller and opening itself into the US market. I think equally people were as ever slightly skeptical about the volume figures and the sales figures for Miller and they know we have to address them, and that’s what we’re doing.