SABMiller

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Background

SABMiller is the world’s second largest beer company, making more than 200 beers including internationally famous brands such as Peroni Nastro Azzurro, Pilsner Urquell, Miller Genuine Draft and Grolsch. In addition to beer, SABMiller also produces its own soft drinks and is one of the world’s largest bottlers of Coca-Cola.[1] Every minute of every day, the company sells more than 140,000 bottles of SABMiller beer. In the financial year to 31 March 2014, SABMiller sold over 315 million hectolitres (one hectolitre is equal to 100 litres) of lager, soft drinks and other alcoholic beverages, generating net revenues of $26.72 billion and earnings before tax of $6.45 billion.[1] The company employs 70,000 people in more than 80 countries worldwide.[1]

History

The South Africa Brewing (SAB) Company started in 1895 in South Africa. By 1956 it owned 98% of the country’s beer market.[2] In the early 1990s, SAB ventured into international markets, eventually shifting its focus from developing markets to the more mature markets, such as the USA.[2] In 2002, SAB acquired the USA’s Miller Brewing Company (MBC) and in the process became SABMiller, the world’s second-largest beer company.[3] MBC was owned by tobacco manufacturer Philip Morris from 1970 until its acquisition by SAB in 2002.[4] Philip Morris used to be owned by Altria. In the present day Altria is the parent company of Philip Morris USA, Philip Morris Capital Corp., an investment company, U.S. Smokeless Tobacco Company, John Middleton, a cigars and pipe tobacco manufacturer and Ste. Michelle Wine Estates. In 2007, Altria decided to separate the firm's US and international tobacco operations. According to the Associated Press, the move would "clear the international tobacco business from the legal and regulatory constraints facing its domestic counterpart, Philip Morris USA".[5] The spin-off was completed in 2008, leaving two distinct companies: Philip Morris International and Philip Morris USA.[6]

Links with Tobacco Companies

The Altria Group has a 27.1% share in SABMiller.[7]

Under the terms and conditions of an agreement between Altria and SABMiller (as part of the Miller Brewing Company) in 2002, Altria has the right to nominate up to three representatives as non-executive directors of SABMiller.[8]

Three members of SABMiller’s Board of Directors are Altria employees and another has historical links with British American Tobacco (BAT).

  • Howard Willard is Executive Vice President and Chief Finance Officer of Altria Group and a Director of Philip Morris Capital Projects.[9]
  • Geoffrey Bible was formerly President and CEO of Philip Morris and Chairman of Altria Group.[10]
  • Dinyar Devitre was Chief Financial Officer of Altria Group and is currently a Director of Altria Group.[11]
  • Jan du Plessis was formerly a non-executive Director of BAT and served five years as its Chair until 2009.[12]

Meanwhile, over at Altria, W. Leo Kiely III, is a former Chief Executive of MillerCoors, which is a joint venture of SABMiller and Molson Coors Brewing.[13]

Against Alcohol Regulation

Peer-reviewed research published in 2009 utilised internal alcohol documents made public as a result of the tobacco-related Master Settlement Agreement.[14] A number of Philip Morris documents included information on MBC. The analysis revealed that MBC opposed alcohol related regulation by deliberately using deflection statements, often in collaboration with the Philip Morris tobacco division and drinks industry affiliates.

For example, MBC:

  • promoted industry-run education programmes;
  • denied any association between advertising and consumption;
  • focused blame on individuals with a “problem” and
  • promoted ‘responsible drinking’ rather than regulation.[14]

Key alcohol related concerns of the MBC included proposed legislative and regulatory controls such as: [15][16][17]

  • tighter restrictions on advertising, marketing and sales;
  • strong enforced labelling including health warnings;
  • blood alcohol content lowering;
  • measures to increase taxes;
  • measures to increase legal drinking age.

MBC also raised concerns about social and health issues, mainly underage drinking, binge drinking, drink driving, alcohol abuse and domestic violence. The authors of the research concluded that “The concerns noted about these issues relate not to their impact on the community, but to their impact on the industry’s livelihood.”[14] In its submission to the Scottish Government’s consultation on Changing Scotland’s relationship with alcohol, SABMiller argued that if there was to be a significant reduction in harm from alcohol then a culture change was required to denormalise excessive consumption.

However, rather than population- level approaches or legislation, the alcohol company proposed that individuals needed to take responsibility for their own behaviour. SABMiller indicated that the role of government should be to understand what motivates individuals to drink excessively and subsequently introduce policies that help individuals change their behaviour.[18][19]

Reposition Alcohol as Responsible

The strategy by alcohol companies such as MBC has been to shift the blame away from the industry and its product and onto individuals, notably what it terms a minority of problem drinkers. In turn this has allowed the industry to paint itself as responsible corporate citizen, “actively working to help change the drinking habits of a tightly defined, problematic minority.” [20][21]

This strategy is evident in a five-year plan for the company in the 1990s, which sought to re-position the alcohol industry as responsible in order to counter the “Anti-alcohol forces” who are “continually seeking more restrictive advertising and labelling regulations”.

The plan for the company proposed to “stress alcohol education programs and messages so as to develop public policy from a framework of education and responsible drinking, as opposed to one of control”.[22]

Evidence suggests that alcohol industry-funded educational programmes are ineffective and potentially counter-productive,[14][23] just like tobacco industry funded education campaigns.[24][25][26]

Against Tax Increases

MBC also included the concept that since the majority of people drink responsibly, there was no need for further tax increases. The MBC argued that “Our industry is already paying its fair share of government coffers…Since the majority of people who drink do so responsibly, it is unfair to penalize the majority to pay for the actions of a few.”[17] When arguing for delaying tax increases, Philip Morris (who owned MBC) asserted that excise taxes were regressive and “fall heaviest on middle and lower income taxpayers”.[15]

As well as using its own voice, MBC also worked with allied industries to oppose tax increases: “We will oppose excessive tax increases by combining our efforts with various beer/alcohol beverage organizations, such as the Beer Institute and the National Beer Wholesalers Association, as well as grass roots organizations”.[27]

Against Advertising Restrictions

To oppose advertising restrictions, in 2000 MBC argued that there were “numerous credible studies [which] conclude that advertising does not cause alcohol abuse; therefore ad bans will not stop it.[17]

In response to concerns about under-age consumption, MBC claimed that it advertised and marketed its products to appeal only to adults.[17] The company argued that advertising did not affect children. “While we understand your scepticism, sound research shows that advertising has a negligible effect on youth consumption; on its own, advertising doesn’t make young people drink.”[17] In 2008 SABMiller stated that “There is, to our knowledge, no conclusive evidence that advertising causes underage drinking or alcohol abuse. There is evidence, however that advertising bans or censorship have been ineffective.”[18][28]

More recently in 2011, the ‘independent’ think-tank Demos claimed that teenage binge drinking could be controlled by parents refraining from alcohol consumption in the presence of their children, talking to children about being sensible and responsible and preventing them from assessing alcohol in the home.[29] The Demos study was funded by SABMiller.[30][31]

Minimum Unit Pricing

Minimum unit pricing (MUP) of alcohol was set out in the UK government’s alcohol strategy in March 2012 as a means of combatting the UK’s high incidence of binge drinking.[32] However, on 17 July 2013 the government announced that it would not be proceeding with the measure at this time.[31]

Like the rest of the alcohol industry, SABMiller opposed this proposal. It claims that such a policy would penalise the “overwhelming majority of adults who enjoy drinking alcohol in a legal and socially acceptable way, neither causing harm to themselves nor to others” whilst having little or no effect on problem drinkers.[33][19]

To support its case SABMiller cited research that it commissioned from the Centre for Economics and Business Research (CEBR).[34]

The report critiqued the available evidence produced by researchers at the University of Sheffield which supported setting a minimum unit price.[35] CEBR concluded that the heaviest drinkers are the least responsive to higher prices. [34]

SABMiller commissioned a number of reports during the period that MUP was being debated:


December 2012 was a key moment in the UK’s policy deliberations on MUP. It may therefore, not be a coincidence that three SABMiller commissioned reports were published in this month.

However, other academics point out that there is thirty years of evidence linking alcohol price to consumption and harm .[20]

Chief Executive of Civil Service John Manzoni received £100,000 salary from SAB Miller

In early October 2014, The Guardian newspaper asked why the CEO of the civil service, John Manzoni had been allowed to keep his £100,000-a-year job at SABMiller.[36] The British government replied that it was satisfied there was no conflict of interest and that a blind trust would be established for his shares. This means that Manzoni would not be able to influence his shares for as long as he held the position of CEO of the civil service.

However, after over 70 public health professionals criticised the decision, another statement was issued by the Cabinet Office stating that although Manzoni would not be required to resign his position at SABMiller, he would have to continue his duties on an unpaid basis.[37] The open letter, which was penned to Sir Jeremy Hayward, the Cabinet Secretary said:

“We find it inexplicable and troubling that Mr Manzoni retains a paid position as non-executive director of one of the world’s largest brewers, SABMiller, while stepping down from two other paid positions in the energy sector. This appears to be only partial fulfilment of the Nolan principles, which require holders of public office to ‘take steps to resolve any conflicts arising in a way that protects the public interest.’”[38]

Initially the Cabinet Office maintained that: “John Manzoni has declared his interests to the Cabinet Office. Following his appointment as the chief executive of the civil service he has resigned his appointments except for SABMiller which it has been agreed he can retain to do in his own time on an unpaid basis.”[39]

However, later the same day it was announced that Manzoni would stand down from his position at SABMiller following the company’s Annual General Meeting in July 2015.[40]

Other Information

SAB Miller Accused of Tax Evasion

In 2010, the British development charity, ActionAid, accused SABMiller of large scale tax avoidance in Africa. According to the charity, ActionAid’s investigation used “published financial information, interviews with government officials and undercover research to find out how SABMiller avoids tax across Africa and India. The cost to the governments affected may be as much as £20 million per year”.[41] In response, SABMiller “rejected” the accusations of “aggressive tax planning”[42] This blanket denial led ActionAid to counter that: “In failing to acknowledge the impact of its tax dodging on public revenues, SABMiller risks being left behind as a new culture of tax responsibility develops”.[43]

Policy Influence in Africa

In sub-Saharan countries, SABMiller and the International Center on Alcohol Policies (ICAP), an alcohol industry funded organisation, have promoted a ‘partnership’ role with governments to design national alcohol polices.[44] A study of the draft alcohol polices of Lesotho, Malawi, Uganda and Botswana provided insight into the strategic and political objectives of the drinks industry. The draft policies drew selectively from the international non-industry funded evidence base on alcohol prevention and minimised - or entirely ignored - the public health approach to reducing alcohol misuse. In keeping with the reports it commissioned the industry (in this case SABMiller and associates) placed responsibility with individual drinkers and dismissed any population level interventions. The WHO’s alcohol policy recommendations[45] were almost entirely absent from the policy drafts.[44]

Talking about its involvement in Africa in its 2008 annual report SABMiller stated that: “In Africa we are working with several governments, NGOs and public health organisations to develop national alcohol policies to reduce alcohol related harm. As a result of these efforts, Lesotho adopted its first national policy in October 2007. Policies are nearing completion in Swaziland, Uganda, Zambia, Malawi and Ghana.”[46]

Alcohol Industry has Vested Interest in Reducing Harm?

The aforementioned policy drafts state: ‘The Government will encourage active participation by all levels of the beverage alcohol industry as a key partner in the policy formulation and implementation process. The beverage alcohol industry has a vested interest in ensuring that alcohol misuse is substantially reduced, and has a unique capacity to access those responsible for promoting and selling alcohol as well as to those who consume their products’.[47][48][49][50]

Notes

  1. 1.0 1.1 1.2 SABMiller, About us, accessed October 2014
  2. 2.0 2.1 SABMiller, About Us: History, accessed October 2014
  3. Altria Group, Our History, 2014, accessed October 2014
  4. Encyclopaedia Britannica, Altria Group, accessed October 2014
  5. Associated Press, 'Altria to spin off Philip Morris International', MSNBC website, 29 August 2007, accessed 19 February 2012
  6. Altria Group, Our history, undated, accessed 19 February 2012
  7. R. Hargreaves, Altria’s holding in SAB is worth more than you think, Seeking Alpha, 5 August 2014, accessed October 2014
  8. Bloomberg, SAB Miller announces new non-executive director, 31 July 2009, accessed October 2014
  9. Altria Group, Corporate Management Team: Howard A. Willard III, accessed October 2014
  10. SABMiller, Our leadership, Board of Directors: Geoffrey Bible, accessed October 2014
  11. SABMiller, Our leadership, Board of Directors: Dinyar Devitre, accessed October 2014
  12. SABMiller, Jan du Plessis, accessed October 2014
  13. SABMiller, Executive Committee W. Leo Kiely III, accessed October 2014
  14. 14.0 14.1 14.2 14.3 L. Bond, M. Daube, T. Chikritzhs, Access to confidential alcohol industry documents: ‘Big Tobacco’ to ‘Big Booze’, Australasian Medical Journal, 2009;1(3):1-26, accessed October 2014
  15. 15.0 15.1 M. Bring, CEO issues book. 15 Apr 1996. Philip Morris. Bates No. 2073931060/1295, accessed October 2014
  16. Philip Morris, CEO issues book. 1998. Philip Morris. Bates No. 2075136583-6716, accessed October 2014
  17. 17.0 17.1 17.2 17.3 17.4 Philip Morris, CEO issues book 2000. 2000. Philip Morris. Bates No. 2074766000-6127, accessed October 2014
  18. 18.0 18.1 SABMiller, Changing Scotland’s relationship with alcohol: A discussion paper on our strategic approach: A response by SABMiller, 2008
  19. 19.0 19.1 B. Hawkins, C. Holden, Framing the alcohol policy debate: Industry actors and the regulation of the UK beverage alcohol market. Critical Policy Studies, 7(1);53-71
  20. 20.0 20.1 T. Cave, A. Rowell, A Quiet Word: Lobbying, Crony Capitalism and Broken Politics in Britain, Bodley Head, 2014, p215
  21. D. Miller, C. Harkins, Corporate strategy, corporate capture: Food and alcohol industry lobbying and public health. Critical Social Policy,2010, 30(4);564-89
  22. Miller Brewing Company, Miller Brewing Company, Five Year Plan 2002 -2006, Bates No: 2024163129-2024163146, accessed October 2014
  23. P. Anderson. Global alcohol policy and the alcohol industry. Current Opinion in Psychiatry. 2009;22:253-7
  24. A. Landman, P. M. Ling, S. Glantz. Tobacco industry youth smoking prevention programs: Protecting the industry and hurting tobacco control. American Journal of Public Health, 2002;92:917-30
  25. M. Wakefield, Y. Terry-McElrath, S. Emery, H. Saffer, F. Chaloupka, G. Szczypka et al. Effect of televised, tobacco company-funded smoking prevention advertising on youth smoking-related beliefs, intentions, and behavior. American Journal of Public Health, 2006;96:2154-60
  26. A.Gilmore, G. Fooks, Global fund needs to address conflict of interest. Round Table Discussion, Bulletin of the World Health Organization 2012;90:71-2
  27. Miller Brewing Company, Miller Brewing Company five-year plan 1992-1996. Mar 1992. Philip Morris. Bates No. 2024163805-3822, accessed October 2014
  28. J. McCambridge, B. Hawkins, C. Holden, Industry use of evidence to influence alcohol policy: A case study of submissions to the 2008 Scottish Government Consultation. PLOS Medicine, 2013,10(4);e1001431
  29. Demos, Poor parenting increases likelihood of binge drinking at ages 16 and 34, 28 August 2011, accessed October 2014
  30. T.Cave, Drunk kids: Who is to blame?, Spinwatch, 28 August 2011, accessed October 2014
  31. 31.0 31.1 31.2 B. Hawkins, J. McCambridge, Industry actors, think tanks, and alcohol policy in the United Kingdom, American Journal of Public Health, 2014;104(4):1363-9, accessed October 2014
  32. HM Government, The Government’s alcohol strategy, March 2012, accessed November 2014
  33. K. Wolfe, Head of Alcohol Policy, Alcohol Minimum pricing Scotland Bill, SABMiller, no date, accessed October 2014
  34. 34.0 34.1 CEBR, Minimum alcohol pricing: A targeted measure? Report to the Scottish Parliamentary Health and Sport Committee, commissioned by SABMiller, August 2010, accessed October 2014
  35. C. Harkins, D. Miller. Struggle over minimum pricing for alcohol has only just begun, 30 May 2012, accessed October 2014
  36. R. Mason, R. Neate. Civil service boss John Manzoni to keep his brewery directorship, The Guardian, 10 October 2014, accessed October 2014
  37. R. Mason, D. Campbell. Civil service chief under fire for keeping job at drink manufacturer, The Guardian, 29 October 2014, accessed October 2014
  38. Alcohol Health Alliance, An open letter via email to Sir Jeremy Hayward, Royal College of Physicians, 29 October 2014, accessed October 2014
  39. The Cabinet Office, Statement in response to letter from 70 medical professionals and charities, 29 October 2014
  40. H. Warrell, Civil service chief to step down from SABMiller board role, Financial Times, 30 October 2014, accessed October 2014
  41. ActionAid, Calling Time – Why SAB Miller Should Stop Dodging Taxes in Africa, Updated version April 2012, accessed October 2014
  42. S. Clark, SAB Miller Right of Reply and Response, 11 November 2010, accessed October 2014
  43. Action Aid, Calling Time – Why SAB Miller Should Stop Dodging Taxes in Africa, Updated version April 2012, accessed October 2014
  44. 44.0 44.1 Ø. Bakke, D. Endal, Vested Interests in addiction research and policy. Alcohol policies out of context: drinks industry supplanting government role in alcohol policies in sub-Saharan Africa. Addiction, 2010:105; 22-8
  45. World Health Organization. WHO expert committee on problems related to alcohol consumption, second report. WHO Technical Report Series no.944. 2007. Geneva: WHO
  46. SABMiller. SABMiller plc annual report. London: SABMiller; 2008
  47. The Kingdom of Lesotho. National alcohol policy, final draft. 6 June 2007
  48. The Republic of Malawi. National alcohol policy, first draft. 6 November 2007
  49. The Republic of Uganda. National alcohol policy (draft). November 2006
  50. The Republic of Botswana. National alcohol policy, draft. 18 August 2008