Graham Mackay

Cold gold: The SABMiller story

From its first brewery in Braamfontein, Johannesburg in 1895, SABMiller has become the most successful multinational company to originate from the African continent. With sales of US$28bn last year and a fat operating margin of 17,8%, the SA-born brewer has come a long way from the days of gold-rush Johannesburg when Castle’s competition as the drink of choice was raw potato spirit mixed with tobacco juice and pepper. This week’s Financial Mail looks at how Graham Mackay turned a local brewery into a R400bn global empire.

Though the conglomerate has evolved over the years, CEO Graham Mackay has carried the local formula with him in going global. Now in 75 countries and with 200 brands, such as Peroni, Grolsch and Miller Lite, under its belt, SABMiller is a R400bn market cap global beer giant and the world’s number two after Anheuser-Busch Inbev. Almost 90% of its sales are outside its home market.

Mackay has been at the centre of this globalisation story. It has been 12 years since he moved the brewer’s Johannesburg headquarters to London and dual- listed it. But it is still South African at heart, as is most of his senior team.

An accomplished bridge player, Mackay is recognised by his peers and shareholders as a shrewd tactician. Last year he was chosen as European business leader of the year by a group of his peers at the CNBC awards.

“I have never met a CEO who impressed me so much with his strategic and tactical judgment,” says Sanlam portfolio manager Claude van Cuyck.

The only criticism of Mackay seems to be that he is a somewhat austere technocrat, a little bit too cool and unflappable. The contrast to his ebullient predecessor, Meyer Kahn, could not be more stark.

Says Kahn, now group chairman: “One of the things that marked out Graham for me is that he is so different from me. He was the best candidate for several reasons: he is 10 years younger , which was ideal in terms of succession planning .” Mackay also had a strong track record as head of the Beer Division (now SAB Ltd) . “And he is very thoughtful — he won’t reply to a question without serious consideration,” adds Kahn.

Mackay is an engineer in a business dominated by marketers and accountants. After university (he studied at Wits) he was brought into the diversified conglomerate BTR to help it choose a computer system for its polymer business. “Then in 1978 SAB approached me to revamp its computer systems, which were frankly in a shambles,” says Mackay.

That was the start of his rise to power at SAB, where after many management roles he was made heir apparent in 1994. At the time SAB was an old-style conglomerate which still owned substantial retail and industrial interests such as the Edgars clothing chain, OK supermarket, Plate Glass and Lion Match. Says Kahn: “People forget that conglomerates were in fashion in the 1970s and 1980s, and perhaps one day when I’m playing golf at the coast they’ll come back into fashion.”

Today, SABMiller is predominantly a beer and other beverage group . It’s a complex business, involving a merger with Coors in the US, cross-shareholdings with French-owned Castel in Africa, and soft-drink bottle agreements with Coca-Cola in Africa and Central America, plus a range of nonbeer drinks sold in different regions. This has been moulded by Mackay’s grasp of strategy — he has always been two steps ahead in the global beverage market…..

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