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The giant South African beer multinational SAB Miller is today recognized as a world leader in its sector, but few of the millions of customers consuming its 200 brands will be aware of the many different strategic moves that created this global empire.

SAB ( was founded in 1895 and quickly achieved success selling its Castle Lager brand to thirsty gold miners. Once South Africa’s relationships with the rest of the British Empire normalized following the Boer War, SAB took advantage of its preferential access to the London Stock Exchange to source funds enabling its expansion into Rhodesia (now Zimbabwe), a friendly neighbour that did not put obstacles in the way of imports coming from a fellow Commonwealth member. The company also worked together with a domestic rival to develop the production of hops in South African farming, a vertical integration ensuring its ability to source the key raw material for its beer products. For the first half of the twentieth century, SAB was happy to consolidate its regional presence, but after moving its headquarters to Johannesburg in 1950, management decided to accelerate the company’s growth rate. The first step involved the acquisition of local rivals. This helped SAB to achieve economies of scale and escape competition in its home market.

From the 1960s onwards, however, further expansion for SAB, like for all South African firms, was restricted by international boycotts following global condemnation of the apartheid regime’s racial policies. To overcome this obstacle, the company started working together with non-South African brands such as Amstel (Amsterdam) and Carling (Cleveland, Ohio) while diversifying into non-beer-related activities. The apartheid regime fell in 1990 and the ensuing cessation of sanctions paved the way for SAB’s renewed internationalization. With the world’s communist bloc also opening up that same year, SAB developed an opportunistic horizontal integration strategy, purchasing a series of breweries in Eastern European, Asian, and Central American countries with new regimes hungry to attract inwards investment. These moves also reflected SAB’s level of comfort with operations located in the developing world, a specialty that its main international rivals, originating in the world’s more advanced economies, did not possess.

By the turn of the century, this unique growth strategy gave SAB the size enabling it to finally compete directly with some of its older rivals. This ultimately led in 2002 to the acquisition of Miller, the USA's second largest brewer in volume. The following year, the new combined entity, now called SAB Miller, began to move into Western Europe, acquiring a majority stake in leading Italian brand Peroni. Whereas most of today’s better known MNEs started in the developed world and only recently expanded into emerging economies, SAB Miller stands out for having followed the opposite trajectory. Its success demonstrates that the path to international success is never written in stone but reflects the particular circumstances in which a company finds itself at different points in time.

Once SAB Miller had achieved sufficient geographical diversification to avoid being over-exposed to any one region, it returned to its previous pattern of focusing on growth markets, starting with its home region of Africa, which attracted nearly one-third of the group’s total investments in the early 2010s (Economist 2012a). This often involved joint ventures with partners like the French company Castel, to consolidate market share (SAB Miller has a 60 per cent market share in Africa for commercial beer) but also because the company’s rapid expansion stretched its finances. There had been a growing consensus within this industry that consolidation was necessary to protect profit margins withered by global competition and SAB Miller’s management paradigm was fairly typical of its peers. Thus, the late 2000s saw more and more horizontal actions where the company would either launch its own brands in new markets or acquire existing brands abroad, most notably Australia’s famous Foster’s beer in 2011. Along the way, it has also become one of the world’s largest bottlers of Coca-Cola products while also launching innovative new cassava or sorghum-based beers—a diversification that offers synergies with the competencies it has developed through its core business.

With fewer of the brand creations that marked the company’s early years, SAB Miller’s recent focus has been on other areas, starting with sustainable development (environmental, social, and health-related) and corporate governance. The new priorities are entirely in line with modern concerns about corporate ethics above and beyond its products. They have not prevented SAB Miller from achieving exemplary financial results: 2011 pre-tax profits of $3.63 billion (up 24 per cent year-on-year) for group revenues of $28.3 billion (up 7 per cent) and net debt down 16 per cent to $7.09 billion. Yet they have laid the company open to increased scrutiny in areas unrelated to its core beer business, starting with recent accusations that it has avoided ‘millions of pounds of tax in India and African countries by routing profits through a web of tax-haven subsidiaries’ (Lawrence 2011). Depriving poor countries of tax revenues is not good for the image of an MNE that has historically specialized in gaining dominant positions in LDCs. The dilemma for the company is its need to generate maximum cash flow to fund its global expansion.

All in all, it would be difficult to analyse SAB Miller’s multinational trajectory without bringing many different factors into the equation. The company states that its focus has always been ‘excelling locally’. By definition, this requires a track record of strategic flexibility.


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