SAB's Zenzele Kabili will contribute to economic growth
South African Breweries (SAB) announced the creation of its new R5.4-billion broad-based BEE ownership scheme, SAB Zenzele Kabili. SAB Zenzele Kabili follows the decade-long success of the SAB Zenzele scheme, which will have delivered R14-billion in value for its beneficiaries, including SAB Zenzele’s 29 000 retailer shareholders, 13 000 current and former SAB employees and the SAB Foundation when it unwinds in April 2020. This is the largest and most prolific broad-based BEE transaction in the South African fast-moving consumer goods (FMCG) industry. The SAB Zenzele Kabili scheme, which remains subject to shareholder approval, will replace and build on the success of SAB Zenzele with the intention of generating value for existing and new BEE investors.
This is the largest and most prolific broad-based BEE transaction in the South African fast-moving consumer goods (FMCG) industry.
The more than 40 000 shareholders who invested in SAB Zenzele will receive R9.7-billion in value when the transaction unwinds in April 2020 and will elect to receive this value in either AB InBev JSE-listed shares or cash proceeds from the sale of these shares. SAB has received consistent feedback from SAB Zenzele shareholders that they want the opportunity to re-invest part of the value from the unwinding of SAB Zenzele into a new empowerment scheme that will hold shares directly in AB InBev. Accordingly, the new scheme will allow SAB Zenzele shareholders the opportunity to re-invest.
Utilising a scheme of arrangement, which requires 75% approval from SAB Zenzele shareholders, SAB retailers will invest a minimum of 15% of the value of their SAB Zenzele unwind in exchange for shares in SAB Zenzele Kabili, which will be listed on the BEE segment of the JSE. SAB Zenzele shareholders voted on the scheme at the SAB Zenzele annual general meeting in Johannesburg on 19 March 2020.
The R5.4-billion SAB Zenzele Kabili transaction will be funded through a combination of R678-million equity contribution from existing SAB Zenzele shareholders, R600-million equity contribution from a new broad-based employee stock ownership plan (ESOP) funded by SAB, R344-million reinvestment by the SAB Foundation, R811-million of AB InBev discounted shares from SAB and R2 973-million of 10-year preference share vendor funding from SAB.
The benefits of re-investing in SAB Zenzele Kabili include the fact that SAB Zenzele Kabili will hold R5.4-billion worth of shares in AB InBev’s global operations, substantial and attractive facilitation from SAB through discounted shares and geared exposure through attractive vendor funding at 70% of prime for 10 years. SAB Zenzele Kabili shareholders will be able to trade their SAB Zenzele Kabili shares from the outset and will be entitled to receive dividends as 25% of the dividends received by SAB Zenzele Kabili, after servicing administrative and operating costs, will be paid to SAB Zenzele Kabili shareholders as a dividend each year.
“Following the success of SAB Zenzele, I look forward to the next chapter with SAB Zenzele Kabili,” says Richard Rivett-Carnac, director of mergers and acquisitions and treasury at SAB. “I believe we have reached our goal to deliver real economic benefits to thousands of South Africans through SAB Zenzele. We are excited to offer SAB Zenzele shareholders the opportunity to partner and invest in SAB Zenzele Kabili and build on the strengths of SAB Zenzele, empowering qualifying shareholders even further, as we enter the new decade. The opportunity to own AB InBev shares through SAB Zenzele Kabili means that they will participate and benefit from the growth of our global business. SAB Zenzele Kabili will also have enhanced liquidity and transparency of pricing for shareholders. Through engagement with the employee trust, we have worked on the principle of equal allocation, as we feel is the right way to allocate shares. We have worked closely with all of our stakeholders to build solid partnerships.”
“SAB is committed to contributing to long term economic growth and development in South Africa,” says Andrew Murray, vice-president of finance at SAB. “With empowerment and ownership as key imperatives and core beliefs of the business, SAB intends to list the SAB Zenzele Kabili scheme on the JSE on Wednesday, 15 April 2020.”
Aware.org is changing the game in alcohol advertising
The launch of the new code of commercial communications for alcohol beverage brands sets out clear guidelines for responsible marketing of their products to reduce harm. The Association for Alcohol Responsibility and Education (aware.org) is ramping up its commitment to reducing the harmful effects of alcohol abuse and misuse through the national launch of the industry’s Code for Commercial Communications.
The Code was recently launched to its partners, media, key marketing industry players and members of government at The Capital Hotel on Park in Sandton, Johannesburg. It was developed as a comprehensive self-regulatory framework and guideline that provides specific and structured principles for the crafting and dissemination of marketing messages for alcoholic products.
The purpose of the Code is to represent a firm commitment by the members of aware.org to maintain high standards of responsibility and ethical conduct in all commercial communication activities, which will demonstrate that we as an industry believe in marketing for change. It is designed to ensure that alcohol-related commercial communication is conducted in a manner which neither conflicts with nor detracts from the need for responsibility and moderation in liquor merchandising and consumption.
“Through the Code, we aim to encourage the best creative minds in the country, both agencies and marketers, to become world leaders in the responsible marketing arena,” said Ingrid Louw, CEO of aware.org. “The Code is the industry standard which we can and must live by.”
According to the World Health Organisation (WHO), South Africa is the 6th-largest drinking nation in the world and even though only 30% of South Africans consume alcohol. The alcoholic beverage industry has been mulling the potential impact of the National Liquor Amendment Bill, presented for public comment in 2016, which could place severe restrictions on the industry’s ability to market their products if enacted into law.
“The aim is certainly not to wag the finger to communicate our strategic intention but it is an opportunity for us to engage with those who have the greatest influence on the strategy, approach and creative expression of the marketing of alcohol products, whether on television, radio, billboards or in digital spaces, which is where most brands communicate their brand messages today and which will continue to grow exponentially in the future,” continues Louw.
Notable speakers at the launch event affirming the industry’s commitment included: the chief director of the National Liquor Authority, Prea Ramdhuny, Heineken corporate affairs director for South Africa Millicent Maroga, MD of Diageo SA Graeme Harlow and vice-president for corporate affairs at SAB Zoleka Lisa, who opened the event on behalf of the chairman of the Board of aware.org, Ricardo Ferreira.
“We need to develop a common industry vision,” Lisa said. “The introduction of our self-regulated code is more than just a promise and goes beyond just compliance. We, as an industry, already actively support campaigns that reduce alcohol abuse and we invest billions each year on responsible marketing activities. We have also committed to developing a substantial portion of our product portfolio into zero- or low-alcohol products.”
A dynamic and challenging panel discussion chaired by veteran journalist and radio presenter John Perlman featured chief director of the National Liquor Authority Prea Ramdhuny, corporate affairs director of Distell Southern Africa Jolene Henn, CEO of the Advertising Regulatory Board (ARB) Gail Schimmel and chief creative officer at Joe Public, Xolisa Dyeshana.
“When Government launched its policy document seeking to change advertising laws and regulations, it was in response to the wide-ranging socio-economic effects of alcohol abuse in the country and the industry’s seeming lack of motivation to change its harmful marketing practices,” Ramdhuny said. “Our hope is that through this Code, the industry can demonstrate that it is not only committed to responsible marketing but can make a real and immediate change in how its products are marketed.”
The debate raised tough questions about the potential efficacy of the Code and the practicalities of its implementation and adoption, as well as its potential impact on alcohol harm reduction in South Africa.
The launch event was concluded by an announcement of aware.org partnering with the Loeries in the annual Loeries Student Challenge, where design, advertising and marketing students around South Africa are invited to find creative solutions to combat underage drinking, using Instagram as a first-to-mobile creative platform for change.
“As the alcohol industry, we will lead from the front with responsible marketing through creative innovation,” says Louw. “We believe that this challenge will be one of our first milestones in driving real and sustainable change through creativity, both locally and internationally.”
The winning campaign will be produced professionally with Facebook and Instagram’s guidance, together with the winners, and run on Instagram to millions of people, courtesy of Facebook.