SABMiller scales back after raising prices

The worldÔÇÖs second-largest brewer, SABMiller has reported a 9 percent fall in annual profits to $2.96 billion, despite putting up the prices of its beers in response to rising commodity costs, and said it plans to scale back investment. ┬á The company's beer brands include Peroni, Grolsch, Pilsner Urquell and Miller Lite. ┬á London-based SABMiller said it is looking to trim expenses ÔÇ£country by countryÔÇØ as it stops price increases in weaker markets such as South Africa and Colombia. The company is looking to compensate for shrinking beer shipments, which declined 1 percent in the fourth quarter.┬á According to CEO Graham Mackay, capital spending this year will be reduced by about 30 percent to $1.5 billion. The closure of some Colombian distribution depots will help save $37 million annually by 2011, the CEO said today. ┬á ÔÇ£WeÔÇÖre taking appropriate short-term actions in some countries to cut costs and curtail investmentÔÇØ to offset ÔÇ£weaker consumer demand,ÔÇØ Mackay said on a conference call. ┬áÔÇ£SAB have been investing heavily in growth which is great long-term, but the market will appreciate them now being more aggressive on cost cutting,ÔÇØ Anthony Geard, an analyst at Investec in Johannesburg, said in an interview.┬á "The group delivered robust results in the face of multiple challenges including higher commodity costs, an appreciating US dollar and weakening consumer spend," said chairman Meyer Khan. ┬á But it added that in the UK its brands were "significantly outperforming" the wider lager market. The overall beer market in the UK has declined by 7 percent over the year. ┬á "Many people in their 20s and 30s, or the so-called 'Generation Y', are responding to their first ever recession," said Nick Miller, managing director of SABMiller's UK operations. ┬á "Rather than battening down the hatches as their parents may have done, they are refusing to give up luxuries altogether, choosing instead to buy everyday luxuries such as their favorite beers, foods or toiletries."