SAB to splash out R1,5bn on expansion of Alrode br
SAB to splash out R1,5bn on expansion of Alrode brewery
Nicola Jenvey
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KwaZulu-Natal Correspondent
SOUTH African Breweries (SAB) will pump R1,5bn into its Alrode, Gauteng, brewery by October next year, increasing its production from 7-million to 11-million hectolitres annually and creating the world’s third-largest brewery, says SAB manufacturing director Maurice Egan.
The move comes with a commitment to channel at least 25% of the value of future capital contracts to black economic empowerment companies. SAB called on suppliers to transfer the skills they previously imported from overseas to local engineers and technical staff.
Supplier companies that have relied exclusively on using imported skills when supplying goods and services could find themselves at a disadvantage when skilled personnel return to their home countries on completion of a project.
The new investment forms part of the R5bn capital expenditure the brewery giant will undertake in the next five years.
It comes as a host of local companies have likewise committed themselves to multibillion-rand expansion programmes that signal confidence in the local economy.
These include the R15bn investment from fuels and petroleum giant Sasol and the nearly R1bn that cement group PPC has committed to increase its capacity by a million tons annually.
Economists say lower interest rates, low inflation and lively consumer spending are some of the factors driving investment in new capacity and leading to a broadening of the local manufacturing base.
Such large-scale investment plans constitute a vote of confidence in the economy, and send positive signals to foreign investors.
Egan says that SAB remains committed to empowerment and skills development.
He says he encourages local suppliers to forge joint ventures and initiate technical skills transfers in meeting empowerment criteria.
In announcing the R5bn investment programme last November, SAB MD Tony van Kralingen said the decision had been taken as a “direct result of SAB’s confidence in the South African economy and its future prospects”.
Egan says the group will spend another R500m on new labelling machines and packaging, particularly in respect of its flagship 750ml bottle. Up to 80% of its product is sold in these bottles.
Egan says another R2bn will be spent on capital investment and replacement programmes, IT upgrade and on staff training.
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