SABMiller's Human Capital Proposition - Institutionalizing a Performance Culture

            
 
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Case Details:

Case Code : HROB085
Case Length : 15 Pages
Period : 2001-2006
Pub Date : 2006
Teaching Note : Available
Organization : SABMiller Plc.
Industry : Beverage
Countries : South Africa, USA, Europe

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Background Note

SABMiller was formed in 2002 by the merger of SAB and MBC.

South African Brewing Company

SAB was founded by Jacob Letterstedt in 1895. Initially, it catered its beverages primarily to a new market of miners and prospectors in and around Johannesburg, South Africa. Its raw potato spirit mixed with tobacco juice and pepper was well accepted. It also launched its brand 'Castle Lager,' which went on to become a huge success. In 1897, it became the first industrial company to be listed on the Johannesburg Stock Exchange (JSE).

Despite the Anglo-Boer War,4 SAB's profits rose to 100,000 and assets exceeded 1 million in 1901. In 1910, it founded Rhodesian Breweries in Zimbabwe.

Human Resource and Organization Behavior | Case Study in Management, Operations, Strategies, Human Resource and Organization Behavior, Case Studies

Over the next few decades SAB consolidated its position despite the setbacks due to World War I and the depression that followed the war. In the early 1950s it established new breweries in Zambia and Bulawayo. In the same year, SAB's corporate office was shifted to London.

Following the imposition of a heavy tax on beer products by the South African government in 1955, beer consumers started switching to spirits, which ultimately hurt the beer industry. SAB responded to the crisis by acquiring its two main rivals, Ohlsson's and Chandlers Union Breweries groups in 1956. The acquisitions helped SAB in reducing costs and maintaining profitability. In the 1970s and 1980s, SAB established breweries in Botswana and Angola.

Until 1990, SAB remained focused mainly on the South African market. Between 1990 and 1998, SAB expanded its international operations and became the fourth largest brewing group in the world with operations in 19 countries.

By 1998, it commanded a 98 percent share of the South African beer market and was considered one of the lowest cost producers of beer in the world.

In 1999, SAB moved its primary listing5 back to London, raising 300 million in international markets. It decided to develop and expand its international beer and other beverage operations and to invest in the rapidly-growing casino industry in South Africa.

It also acquired controlling interest in Pilsner Urquell and Radegast, a leading brewery in the Czech Republic. SAB's biggest brands at the time included 'Pilsner Urquell', 'Castle Lager' and 'Ursus'. In 2002, it acquired MBC and created SABMiller.

Miller Brewing Company

MBC was founded in 1855 by Frederick Miller (Miller) in the US, when he purchased the small Plank-Road Brewery, an old brewery started by Frederick Charles Best and abandoned in 1854. The Plank-Road Brewery, now the Milwaukee Brewery, was several miles west of Milwaukee in the Menomonee Valley...

Excerpts >>


4] The Anglo-Boer War was fought from October 11, 1899 till May 31, 1902, between the British Empire and the two independent Boer republics of the Orange Free State and the South African Republic (Transvaal Republic). The three year war disrupted economic and social conditions in South Africa.

5] The main exchange on which a given stock is listed. The stock may trade on other exchanges as well, but it will always have one primary exchange.

 

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