Boss Talk: SABMiller Has Taste for More Deals


Alan Clark, SABMiller PLC's chief executive, is thirsty for deals.

Two years after the world's second-largest brewer by sales spent about $10 billion to buy Australia's Foster's Group Ltd., and amid a wave of billion-dollar deals that has transformed the global beer industry, Mr. Clark says more tie-ups are on tap.

Asia is a particular focus of deals for the U.K.-based brewer, which sells beer on every continent except Antarctica and whose brands include Snow in China, Peroni in Italy, Castle in South Africa and Miller in the U.S.

As beer consumption slows, acquisitions are a route to higher sales. SABMiller's lager volumes dipped 1% for its fiscal first quarter ended June 30, with growth in Latin America and Africa offset by declines in Europe and North America.

The roughly 25% U.S. market share of MillerCoors, a joint venture between SABMiller and Molson Coors Brewing Co., also has slipped, largely due to the struggles of the Miller brand.
Mr. Clark, 54 years old, took the CEO job in April. The South Africa native, who has a doctorate in psychology, discussed deals and craft beer, among other topics in a recent interview.

WSJ: We've had a decade of rapid beer industry consolidation. Is there room for more?

Mr. Clark: There's plenty of room. The four major brewers have a 60% share of global beer volume. That means there's still 40% out there. If you look at a map, the one that stands out is Asia, which is less consolidated. Asia is clearly something that we ought to be looking at very carefully.

WSJ: Brewers have struggled in Europe for several years. Do you see that improving?

Mr. Clark: In the developed markets, things have been much harder. Frankly, we don't see any real change going on in Europe. The consumer really is still quite glum. The price competition is going to be a feature of the European market for a long time. I think it's going to be rough for a number of years to come.

WSJ: In the U.S., the growth is in small craft beers. How challenging is it for a big brewer to play in craft, which is about being authentic and local—the opposite of a big company?

Mr. Clark: We can access that space. Blue Moon [a MillerCoors brand] would be a very good example of that. Some of the beers associated with the major brewers go back well over 100 years. If there are stories about the authenticity or heritage of beers, we certainly have them.
People are fascinated by brewing and in some ways it's an art, but brewing is also a science. Our level of capability and skill, I would argue, significantly outweighs those of the craft brewers. If we try and replicate the small microbrewery, that's a dead end for us because the economics just don't work.

WSJ: Light or low-calorie beer had a remarkable run in the U.S. for three decades but has been declining in recent years. Has it peaked or is there room for growth?

Mr. Clark: I don't sense we will recreate the levels of growth we've seen in past decades. If you look at Latin America, there's actually a strong movement to light beer and they're almost now entering a phase that the U.S. was in perhaps in the early '80s.

WSJ: Inside the MillerCoors joint venture, Coors Light has continued to grow but Miller Lite sales have declined at an alarming rate. What's happening there?

Mr. Clark: The Miller Lite brand has been in decline for a long time, about a decade. What's the positioning of the brand? How is that relevant to modern consumers? We haven't cracked it. The product itself is a very high quality, very refreshing beer. [The problem] sits within the marketing.

There's been a consistency in the positioning of [Coors Light], the Rocky Mountain cold refreshment, which is so simple and yet so powerful in its expression.

WSJ: Do you see any near-term prospects for acquiring majority control of your big partnerships in the U.S., China, Turkey and Africa?

Mr. Clark: If one of those partners chose to exit, we have the contractual arrangements to make sure that we would have the right to make an acquisition. From an M&A point of view we're actually looking outside of those structures, because we feel through the partnerships we've established solid positions in those geographies.

WSJ: Which of your beer brands has the most potential globally?

Mr. Clark: Beer is local, so having a portfolio of global brands is very useful because we can think about which brands are appropriate in which markets. Miller Genuine Draft is doing particularly well in Latin America. Will that brand do that well in Africa? In Europe? Not sure. Peroni is a brand that does very well in the U.K. It does very well in the U.S. It does very well in Australia. So we can pick and choose.

WSJ: You have operations on six continents. How much time do you spend outside the U.K.?

Mr. Clark: Probably 60% to 75%. It's kind of an endless tour of the world.Being home with my family is important and fantastic. Being at home, as in my office, that's not that great actually. You get bored with emails quite quickly. It's actually good from that point of view to get out.

WSJ: How do you apply your doctorate in psychology in running a company?

Mr. Clark: My psychology background was in clinical psychology, so psychopathology and clinical treatment. Fortunately, I don't have too much need for that within the business world. It's actually really learning the process of management, managing and working with people and being managed, over a long period that's much more elementary.

WSJ: How would you describe SABMiller's corporate culture?

Mr. Clark: In my 22 years with SABMiller, [previous CEO] Graham Mackay never gave me a direct instruction. When I'm dealing with a country operation, what I'm really trying to do is understand how deeply the team there thought through what the objectives and challenges are. I'm not coming in to issue a perspective on which direction they could take.