South African Breweries (SAB) is experiencing a growing divide in consumer spending patterns, with strong demand for premium beer brands such as Corona and Stella Artois contrasting sharply with mounting pressure on its traditional core beer portfolio as cash-strapped consumers prioritise food and transport over discretionary purchases.
CEO Richard Rivett-Carnac noted that budget-conscious consumers are now focusing their limited funds on necessities such as food and transportation rather than discretionary items.
Despite these challenges, SAB reported record third-quarter volumes, underpinned by mid-30% growth in its premium beer portfolio, led by Stella Artois and Corona, as well as low-30% growth in its Beyond Beer category, which includes brands such as Brutal Fruit and Flying Fish.
However, performance in its mainstream beer portfolio, including Castle Lager, Hansa, and Carling Black Label, remained more challenging, reflecting financial strain among lower-income consumers.
Economic Pressures Intensify
Rivett-Carnac acknowledged that the company had delivered a solid set of results despite difficult economic conditions affecting many of its customers.
Rising fuel and diesel costs have pushed up transportation expenses, while persistent food inflation has left many households with less disposable income. As a result, consumers are increasingly directing their spending towards essential items.
The low-income consumer has been under significant pressure currently— Rivett-Carnac said SAB was managing costs tightly and using hedging strategies to limit the extent of price increases passed on to consumers.
Premium Beer Segment Expands
Premium beer has emerged as one of SAB’s strongest growth drivers. Corona and Stella Artois delivered growth of more than 30%, reflecting years of sustained investment in building their presence in South Africa’s premium beer segment.
Rivett-Carnac said SAB had invested heavily in marketing, retail visibility, availability and product quality to establish both brands. Despite pressure on household budgets, middle- and higher-income consumers are increasingly choosing premium brands.
He warned, however, that current growth rates should not be viewed as permanent, emphasizing that sustained investment will be necessary to maintain momentum.
Beyond Beer and Alcohol-Free Demand Surge
Beyond Beer is another area delivering significant growth. The portfolio, which includes Brutal Fruit and Flying Fish, recorded low-30% growth, outperforming the broader category and highlighting changing consumer preferences.
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Another growing segment for the brewer is non-alcoholic beer, where demand continues to increase quarter after quarter. SAB’s portfolio includes Castle Free, Corona Cero and a recently introduced alcohol-free Brutal Fruit variant.
The category is attracting consumers who want to participate in beer occasions without consuming alcohol, whether for health and wellness reasons or because they are driving. It is also creating new opportunities for distribution.
Rivett-Carnac said SAB was intentionally expanding the availability of its non-alcoholic products into grocery stores that do not hold liquor licences, including mainstream supermarket aisles.
SAB will continue evaluating opportunities to extend alcohol-free variants across its portfolio as consumer demand develops.
Emerging Trends and Regulatory Concerns
SAB is also monitoring broader trends that could influence future alcohol consumption, including the rise of weight-loss drugs such as Ozempic and the rapid growth of online gambling.
Rivett-Carnac said GLP-1 medications were not yet having a material impact on the South African beer market, although the company was keeping a close watch on developments in more mature international markets.
Online gambling, however, is emerging as a more immediate concern. SAB has conducted consumer surveys that indicate high levels of participation in online betting among its customer base.
Kashifa Ancer, project lead of Rethink Your Drink, an alcohol harm reduction campaign by the DG Murray Trust, said the government needed to clarify its commitment to minimum unit pricing and clearly show where alcohol tax and pricing reform is heading.
Looking ahead, SAB’s growth strategy extends beyond premiumisation. The company has invested almost R20bn in recent years to enhance the capacity and capabilities of its breweries and strengthen its manufacturing and distribution network.
Although SAB does not expect dramatic growth in South Africa’s domestic beer market, it sees considerable opportunities to expand exports of beer and Beyond Beer products into the rest of Southern Africa.
