C A S E T E A C H I N G N O T E S
SABMiller: from strength to strength
Duncan Angwin and Gerry Johnson
1. Introduction
This case study provides students with the opportunity to consider a) how the corporate logic of
2. Position of the case
Exploring Strategy has a short case on the brewing industry this could be a useful background
to the SAB Miller case. The case itself provides the opportunity for a consideration of options
3. Learning objectives
Study of the case involves students in understanding:
How aspects of the macro-environment influence competitive structures of markets
(Chapter 2 of Exploring Strategy), organisational capabilities (Chapter 3), stakeholder
4. Teaching scheme
This case study can be taught as a class discussion orchestrated by the instructor around analysis
of the strategic development of the organisation. A variant is to get to the point where a number
Instructors Manual on the Web
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5. Questions for discussion
1. Identify the corporate logics that SABMiller have adopted in its development and the
reasons for its success.
6. Case analysis
1. Corporate logic
SABMiller has shown a remarkable flexibility in its organisation and operations since its
inception. Its establishment in the Johannesburg gold fields was the result of the recognition of
the huge market potential that the mining communities provided to the company. Over the
subsequent decades it came to dominate the beverage industry in South Africa and establish a
2. Strategic position
The case provides an opportunity for students to consider the strategic position for SABMiller in
terms of its capabilities and competences, the business environment it faces, and stakeholder
The business environment
In terms of business environment, SABMiller is now operating worldwide. As noted above, its
origins are in developing countries and its growth has come through entering developing
markets, acquiring businesses and brands, and growing them. Clearly, the market conditions and
Africa
The company does, however, still have a very strong position in Africa. Students should
consider the extent to which this is a strength or a possible threat (or both). This has historically
been a somewhat volatile set of markets; one of the reasons, presumably, why the company has
Asia, Eastern Europe and Latin America
The common characteristic of both of these regions is the relatively underdeveloped nature of
the beer markets. This has provided SABMiller with a major source of growth. Arguably, the
competences learned in Africa, both in terms of trading in developing markets and in terms of
acquisition of breweries, have proved especially useful here.
Questions can then be asked about further opportunities here. Efforts at expansion in China have
continued over the years. Although this is the worlds largest beer market by volume, it is
Western markets
A significant problem with the focus on emergent markets historically was that, much of the
companys profits were in soft currencies leading to shareholder concern about the overall
The beer markets in Western Europe and America are, however, very different from those in
developing countries. The markets are more concentrated and saturated. Moreover, following
the Miller acquisition a large part of SABMillers operation came to be in the highly
competitive US market. Students may ask: has this perhaps distracted from a focus on more
profitable growth in other less developed markets? Was there an alternative?
Strategic capability
In terms of the companys resource base and capabilities, students might emphasise the
following:
Since its inception, the company has demonstrated responsiveness and adaptation to some
significant challenges in its environment. Its move of corporate headquarters from London
to Johannesburg in 1950, the introduction of a non-discriminatory code of employment in
The shifting of its primary listing back to London is a further example that this capability
still pertains. With a shift in strategic focus from surviving as a South African firm to
growing as a global one, the firm had to move to a location where it could raise the funds it
needed to facilitate this. However, as noted above and demonstrated in the case, this has
brought with it a whole new set of stakeholder expectations.
Nonetheless, SABMiller has much less experience or expertise in Western markets, either in
terms of competing in such markets, or at the corporate level in acquiring major firms
Overall strategic position
It might be useful to ask the students to pull together an overall explanation of the strategic
position facing the company. For example:
For example, in terms of markets, SABMiller has benefited from their presence in high growth
markets (e.g. eastern Europe), but many of these markets appear to be plateauing. The western
European and US markets are also at best flat, if not declining. Where there is growth, as in
3 Strategic options and evaluation
The analysis of the strategic position of the company therefore leads to a consideration of
strategic options. Arising from the analysis of overall strategic position the strategic options
might include the following:
Emergent opportunism: That the right direction will become apparent based on being
operationally good and able to respond to opportunities, supported by their size and
An emerging market re-focus: Reduce the risks associated with the more developed
markets e.g. in Europe, US and Australia, particularly with the recession in progress in
2012, and focus on ensuring as firm a base as possible in emergent markets. This would
seem feasible given SABMillers competence in developing efficient operations would
this be seen by investors (or managers) as a way of sustaining growth as a global player?
Indeed, would it make it an attractive target for takeover?
Product development: That is, new beer products and transference of beer products and
brands between markets. This builds on what the company has been doing so far. It has
Market development in Asia/Eastern Europe/Latin America: That is, developing further
the strategy already under way to enter developing markets outside Africa. This builds
strongly on the strategy that has been followed over recent years. It seeks to apply the
competences built up in African developing markets to developing markets elsewhere. It has
Market development: Western markets: That is, developing further presence in Western
Europe, America and Australia. The initial foray into the US market was more trying than
anticipated and observers believe that this may also be the case with the Foster Group
acquisition. If not, what are the alternatives in the US and Australia, given that exit does not
seem acceptable. In Europe, there seem few alternatives other than seeking to build share
with existing brands against fierce competition. The company is developing competences in
this, but building brands in mature markets is not their historic strength.
Diversification: That is. a move away from a reliance on brewing towards, for example,
distribution and retailing (the company is already operating in hotels). This is not the
strategic thrust of the firm as it stands, but it has a history as a much more diversified
Sell: That is. be acquired, presumably, by one of the other major brewers. Unlike most of
the other major brewers (all western), SABMiller offers a market presence and a set of
competences that they do not have. It would be a significant opportunity for a major brewer
to obtain a substantial position around the world. It might also be attractive to investors,
who would see SABMiller realising a healthy return for its shareholders. However, it is
questionable whether it would be acceptable to the existing management.