RICHARD RIVETT-CARNAC: Mission accomplished: how giant breweries merger helped SA

SABMiller merged with AB InBev in October 2016 as part of the largest global acquisition in the beer industry. This was a significant moment for the local beer market that would foster great opportunities for foreign direct investment, economic growth and uplifting our communities.

As part of the merger, the parties agreed to invest R1bn into SA for the five years after the merger and agreed to other conditions. 

Carefully negotiated and crafted to ensure the merger would be in the best interest of the country, economy and communities, the public interest commitment and merger conditions enabled a joint effort and commitment by the government and SAB to advance agricultural development, enterprise and supplier development and societal upliftment initiatives. 

Looking back, the merger’s success can be attributed to the robust and vibrant public partnership with the government, represented by the departments of agriculture and of  trade, industry & competition and the presidency.

This unique opportunity of collaborating with the government provided key lessons for future mergers.

PARTNERSHIPS

Public interest commitment and merger conditions must have a foundation of strong and transparent partnerships.

The SABMiller merger was governed by an implementation board with expertise from both the government and SAB that led to both parties having rich and robust discussions,  allowing us to hold ourselves accountable for raising the bar and realising the goals we had set out at the onset of the merger.

The diverse perspectives of the various board members enabled the implementation of a strong monitoring and evaluation framework that ensured all parties were held accountable.  The creation of a representative implementation board is integral to ensuring that all merger conditions are met and all parties walk the journey together.

During the five years of delivering on our merger commitments, our business and the economy were hard hit by the pandemic, during which we experienced four alcohol bans

EMPLOYMENT

One of the key conditions of the merger was SAB’s commitment to preserve jobs and ensure the number of staff employed by SAB before the merger  was maintained. 

During the five years of delivering on our merger commitments, our business and the economy were hard hit by the pandemic, during which we experienced four alcohol bans that resulted in 168 trading days being lost.

We managed to preserve all the SAB jobs and decided, with our employees, that all employees would take a 10% salary cut from June 2020 to July 2021, avoiding the need to reduce the workforce at a time when we were not trading or earning any revenues. 

We prioritised the 1-million lives and livelihoods within our value chain that extends to farmers, taverners and retailers. 

The employment commitment required us to preserve jobs in a time of crisis. This should be a key consideration for all future mergers, to help tackle unemployment.

TRANSFORMATION

SA is one of the most unequal societies in the world.  A World Bank report released in March titled Inequality in Southern Africa stated that “based on Gini coefficients of consumption (or income) per capita, SA ... is the most unequal country in the world, ranking first among 164 countries in the World Bank’s global poverty database”. 

I am proud to report that we were able to close out our existing broad-based BEE  scheme, SAB Zenzele, paying out a total of R10bn to the beneficiaries (employees, retailers and SAB Foundation) at a time they needed cash most.

This final payout of R10bn brought the total payout  to beneficiaries over the life of the scheme to R14bn, making SAB Zenzele the largest and most successful BBBEE share scheme in the fast-moving consumer goods sector in SA. 

In addition,  SAB and AB InBev launched SAB’s new BBBEE scheme, SAB Zenzele Kabili, in May 2021, which included R1.5bn in free AB InBev shares that were issued to new and existing beneficiaries. 

We are delighted we were able to stimulate transformation in the country and create a new platform of for building a financial legacy for generations to come.

LOCAL SOURCING

To stimulate the economy and create jobs, local sourcing is key. One of the achievements I am particularly proud of is ensuring that beer is local, natural and inclusive, with 96% of our products being locally sourced.

Through ensuring that raw materials and inputs of our products come from the valleys and fields of SA, we have created an industry that has significant multiplier effects for the local economy — as SAB grows, so does the local economy.

Furthermore, we sustained and helped transform the local glass manufacturing sector through our support of Isanti Glass’s acquisition of Nampak Glass.  This acquisition transferred ownership and control of a very important manufacturing asset to black industrialists and the staff of the business. 

Local value chains should be protected and secured by all future mergers to support employment and the growth of the economy.

This has been one of the most transformational five years I have experienced in the business

As we officially present our final merger report to the Competition Commission, I am happy to say this has been one of the most transformational five years I have experienced in the business. 

As a company anchored in communities it was important that through the R1bn invested and the other commitments mentioned above we were able to make a meaningful difference to the economy and more importantly, the communities we support.

We were able to support black emerging farmers to participate in our value chain, capacitating almost 1,000 farmers and funding the first black hop farmer in SA, in George in the Western Cape.

Furthermore, we were able to stimulate enterprise and supplier development through our investment into the SAB Thrive Fund, where we were able to drive transformation of previously white-owned businesses in SAB’s supply chain to black ownership. 

Additionally, this commitment supported SAB’s social upliftment initiatives through investing in education, sports infrastructure, water stewardship and waste management. 

We will continue to place environment, social & governance (ESG) at the centre of our operation, because  performance must be measured not only by shareholders but also by how a company achieves its ESG objectives.

As a newly appointed CEO I intend to make the next decade the best decade SAB has experienced. 

• Rivett-Carnac is SAB CEO