South Africa: AB InBev invests $200 million in 2 breweries and 1 malthouse

AB InBev said on Monday it would invest R2.8billion ($200 million) in extending and upgrading its two SAB-breweries in Alrode and Rosslyn in South Africa. R1.5 billion ($110.8 million) will go to the brewery in Rosslyn, in Pretoria, to build a new brewhouse and a new packaging line for returnable glass bottles. The new brewhouse is capable of 14 brews a day of 750 hectoliters, and is scheduled to be in operation by the first half of 2018.

The remainder of R1.3 billion ($96.1 million) will be used at the Alrode brewery on the outskirts of Johannesburg to also install a new packaging line for returnable glass bottles and to construct a greenfield malting plant with a capacity of 40,000 tons of malt per year. With a total malting capacity of 150,000 tons of malt per year in Alrode in addition to the 140,000 tons at Caledon in the Western Cape, the company intends to be in future nearly self-sufficient in South Africa and does not have to spend foreign exchange on importing its main raw material.

The Alrode packaging line will be operational by August 2017 while Rosslyn’s will be in production by October 2017.

The investment will also increase SAB’s capacity by 4 million hectoliters a year, which is needed to satisfy the growing beer demand in South Africa and to officially introduce the Budweiser brand, as well as other major African brands owned by AB InBev, such as Kilimanjaro (Tanzania) and Hero (Nigeria).  For this SAB will also buy 4 million new plastic crates and 48 million locally produced returnable glass bottles.

As part of the regulator’s condition for AB InBev’s purchase of SABMiller, the brewer committed to invest additional R1bn ($73.9 million) over five years in agricultural development, enterprise development, the promotion of manufacturing, exports and jobs, and on making a contribution to the improvement of society through sustainability, alcohol harm reduction and educational initiatives.

SAB will spend R610million ($45.1 million) of the R1.0bn to develop the capacity of 800 new emerging and 20 new commercial farmers, with the aim to produce annually 475,000 tons of malting barley. The company intends to make South Africa a net exporter of hops and malts by 2021.

Ricardo Tadeu, SAB and AB-InBev Zone President for Africa said that “the continuous investment shows we believe in the future of our category and that there is a lot of growth still to be had. It demonstrates the company’s agenda to invest and participate in expanding the economy.”

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