ABMiller Case Study

1.0 Introduction
A company that full understands the importance of strategizing is SABMiller, a leader in the global brewering
industry. Founded in 1895 as South African Breweries (SAB) Limited, SAB became SABMiller in 2002 by taking over
USs second largest beer maker company Miller Brewing Company. SABMiller now operates in Europe, Latin and
North America, Africa, India and China. In achieving sustainable development, SABMiller is continuously motivated to
grow fast ahead of its competitors and grow in line with the requirements of the industry while also defending its
existing leadership position. This South Africa-originated company further embraces the enhancement of its value
proposition through its owning the growth strategy. Further, SABMiller owns one of the most important elements of
value chain which is the brand, making the company the most plausible subject for the intents of this paper.

2.0 Strategic Analysis of SABMiller

2.1 Strengths
2.1.1 Owning the strategy process
Owning the growth process which is embedded on market and consumer intelligence is one of the key
strengths of SABMiller. SABMiller ensures that it can capture higher value of share compared to its competitors by
means of analyzing consumer trends and marketplace dynamics. Prior to introducing brands in the market, careful
consideration are engaged into such as the preferences, expectations and requirements of the market. Adhering to
consumer-centric trends guides the way SABMiller produces its brands.
2.1.2 Product differentiation
What makes this possible is SABMiller has the capacity to continuously innovate hence differentiating
products. Strong and relevant portfolios of brand are prioritized to compensate with the needs of each market
segment. As such, brands encompass various categories from economy to premium, local to international and
traditional to experimental. This brand mix caters to the needs of each market segment.
2.1.3 Process optimization through localization
SABMiller boasts for its capability to widen economies of scope through penetrating markets and expanding
territories especially those markets that are economically-advantaged. SABMiller is consistent with its expansion
strategies of mergers, acquisitions and joint ventures. In each local market or business unit, optimization of processes

and localization of operation is achieved as the company believes in the peculiar set-up of each local business.
SABMiller believes in superior local execution.
2.1.4 Effective supply chain management
Elements of the supply chain specifically manufacturing is controlled as well. Further, SABMiller also
possess the capacity to leverage global operations though collaborative schemes. Supply chain management also
functions to achieve both longer and shorter term objectives through maximizing the operations.
2.1.5 Talented people
SABMiller also invests in its people as a value-adding activity thus critical to the success of the company.
The company maintains a strong culture of accountability and empowerment through educating the workforce.
Trainings and development intended for the employees are sought.
2.1.6 Commitment to corporate social responsibility and sustainable development
SABMiller embraces the 10 social and environmental priorities and complies with these completely or is
planning to do so if possible. Such endeavour addresses the need to think of the community in which the business
operates along with the growth of the company.
2.1.7 Stable financial operation
Market capitalization, despite recent global financial challenges, continued to increase by 9.4% as evidence
by the improved ranking in the Top 100 companies. Volume growth in Europe is reported to increase by 8%, Latin
America with 5%, Africa with 6%, China with 15% and North America with 27% increase in EBITA. Based on these
figures, SABMiller is strategically positioned in key markets in the world. Further, the company was even able to
invest a total of US$2.0billion over the past 12 months.

2.2 Weaknesses
2.2.1 Letdown in national infrastructure
Because of the tendency to focus initiatives on the growing markets, home-based infrastructures suffer.
SABMiller finds difficulties in leveraging operations compared to the extent of investment devoted to international
operations. Based on this, strategic decision-making within SABMiller could be considered as poor and inadequate.
SABMiller upgraded breweries, build new facilities and invest in new sales and distribution minus the initiative to
prioritize operations in the country origin.
2.2.2 Offsetting input costs through price increases

Products of SABMiller are commodities which inherently rely on demands and supply in terms of pricing.
Nevertheless, raw materials are also consistently increasing affecting the retail prices of SABMiller brands. Oil prices
which impact transportation and packaging costs also contribute to operational expenses that are trickled down to
consumers.

2.3 Opportunities
2.3.1 Penetrating other Asian markets, Africa including and Latin American market
Economically, Asian markets are expected to incessantly strive in the coming years as more and more
powerful multinational companies offshore their businesses. Further, the resilience among Asian markets is one
aspect seen to be profitable.
2.3.2 Disposal of businesses
It was mentioned that SABMiller is currently pulling back from its non-core operations, which can be seen as
an opportunity to focus on core businesses. SABMiller intends to continue to reduce hospitality investments. In this
way, the company could further invest in markets where brewed products strive.
2.3.3 Consumer demands of wider product portfolio
Consumers preferences change in accordance to their needs. In times where consumers are becoming more
ethical shopper than before, they typically require healthier drinks. Though this may be seen as a threat in alcoholic
and hard liquor drinks, SABMiller could view this aspect as an opportunity to further diversify the brand mix.
SABMiller could explore opportunities provided by wine coolers, pre-mixed beverages, flavored beers such as fruitsbased beers and malt beverages.
2.3.4 Expanding target market
Men are generally into beer drinking but the populace of women who drinks beer is also growing. In addition,
young adults, working or not, finds pleasures in drinking beers as well. These categories have a relatively moderate
to high spending capacity. Drinking brewed products only conforms to above 18 years of age limitation, while some
are 16.

2.4 Threats
2.4.1 Emergent substitute products
It would be very easy for patrons and consumers to switch brands because of the growth in choices and
alternatives especially now that SABMiller offsets higher input costs through increasing the prices of the products.

2.4.2 Fierce competition in the brewing industry

Consolidation is a common expansion strategy in the brewing industry which contributes in the intensified
competition. Competition at the retail level had been also strong because of the growing presence of brewing
products in stores and supermarkets, narrowing profit margin of brewing companies. Bars and restaurants lose
profitability over mom and pop stores. Moreover, SABMiller could witness market saturation in the following five
years.

3.0 Sustainable Competitive Advantage

Three among the strengths that could be sustainable for SABMiller are the extensive brand portfolio, the
owning the strategy process and the local responsiveness. The extensive brand portfolio has no direction other than
forward. SABMiller commits in building a spectrum of brands that will provide for the needs of the target market. For
them, stronger brands are the key to deliver better value proposition to the consumers. Because brewing market is
considered to be near-decline as products are not a necessity, the market share of SABMiller products is still stable.
Product innovations are also coupled with packaging innovations which are added values. For instance, the
introduction of new bottles and provision of fridges is not necessarily imitable.
Aside from brand mix improvements, SABMiller also acquires sense of ownership of internal processes. In
making the beer category more appealing, the company taps the opportunity to concentrate on its core markets and
capturing higher value share on those markets. Moreover, SABMiller strategises through effective segmentation of
the market and investing in more effective and efficient selling and distribution despite the bias to develop markets
that the company already have established and advantageous positions.
SABMiller experiences no pressures on local responsiveness as the company understands that each market
has its own unique features. Its operational capability to both expand globally and locally is an aspect of strategic
management that could not be easily substitutable. Improvements in daily operation in existing markets are a priority
despite the fact that SABMiller is more tended on leveraging global scale. Nevertheless, development in the business
level is based on strategies at the corporate level of capturing best ideas and practices and dispersing to the groups
hence benchmarking.

4.0 Recommendations
SABMiller must converge into materiality analysis so that they can define their priorities and work from there.
There are several issues identified including environmental and occupational health and safety issues. If the company
is going to do this, then they could focus their energy and resources on most areas that are needed to be addressed.
Decision-making must pass through consensus so that they will acquire reactions and responses from their

stakeholders regarding their future plans that concern core operations. SABMiller should also engaged in both local
materiality analysis and international materiality analysis so that the needs from business levels to corporate level
could be consolidated and actions could be based in the findings of the analyses. The materiality could clarify issues
on how recent strategies could drive long term business value, identify and address risks surrounding the strategy
and build and maintain a strong brand and reputation further.
The second option for SABMiller is the evaluation of the internal environment through the MOST framework
where M is the mission, O is the objective, S is the strategy and T is the tactic. Importantly, the international market
environment is continuously changing and so the company must not settle in employing a single strategy or model.
SABMiller should also consistently assess the organization's fundamentals. Supposing that the company is faced on
conflicts in the business and the international levels, the company cannot employ the same strategy. Mission,
objectives, strategies and tactics must be customized to the needs of every business unit.
A knowledge innovation zone, or better yet, every unit or department must be treated as knowledge
innovation zone should be a priority for SABMiller. SABMiller must conduct needs analysis for knowledge
management. Investing on knowledge functions could make SABMiller a knowledge organization whereby knowledge
concepts, goals and development outcomes will fully materialize. To accomplish this, there must be thematic groups
within the organizations. Thematic groups will act as the implementers of knowledge management programs within
the organizations. They could aid in identifying new knowledge resources and capturing those; establishing and
implementing new procedures and cleaning out obsolete ones; introduction of innovative practices and aligning the
supply and demand of knowledge within the organization.

5.0 Conclusion
SABMiller was founded in 1895 and since then continues to penetrate global markets through its diversified
brand portfolio, owning of growth process and operational capability. Aside from these strengths, SABMiller also
boasts for its effective supply chain management, talented workforce, commitment to corporate social responsibility
and stable financial operation. On the other hand, there are weaknesses inherent for SABMiller such as failures in
South African infrastructure and compensating higher input costs through increasing retail prices. Opportunities that
SABMiller could explore are penetration of other Asian and Latin American markets, discovering new products
portfolio to cater to consumer demands and expansion of market segment. Threats include emergent of substitute
products and intense competition in the brewing industry.

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