SABMiller Colombian beer vols to dip after tax rise

* Colombia to raise VAT on beer from Feb. 1

* SABMiller cuts volume target for Latin America

LONDON, Jan 26 (BestGrowthStock) – Brewing giant SABMiller Plc
(SAB.L: ) expects beer volumes in its second-biggest market,
Colombia, to fall by a one-off 4.5 percent after next month’s
tax rise, prompting it to trim its Latin American volume target.

Colombia will raise VAT on beer to 14 percent from 3 percent
on Feb. 1, lifting beer prices by at least 8 percent and hitting
volumes just as the Colombian market looked set for recovery.

“We expect a modest impact on sales volumes, but we could
see volumes off 4.5 percent,” said SABMiller Latin America
President Barry Smith following a seminar in London.

He said the group would look to mitigate the impact of the
first Colombian beer price rise since October 2008 by reviewing
brewing costs.

The tax rise was one reason why Smith cut his medium term
Latin American beer volume annual growth target to 4-6 percent a
year from 5-7 percent. He also cited the economic downturn and
Colombia’s reliance on the sluggish U.S. economy.

Analysts now expect Colombian beer volumes in the year to
March 2011 to fall some 3 percent after previously looking for
volume growth of around 2 percent.

Colombia earns around 14 percent of SABMiller’s profit,
second only behind South Africa, and in the October-December
quarter saw beer volumes rise 6 percent in a Latin American
region in which the group saw volumes ahead 4 percent.

SABMiller, with brands such as Aquila and Club Colombia,
controls around 98 percent of the Colombian beer market.

SABMiller shares have fallen nearly 200 pence over the last
two weeks after Heineken (HEIN.AS: ) beat it to the purchase of
Mexico’s FEMSA on Jan. 11 and worries over the tax rises in

They were off 1.3 percent at 16.50 pounds by 1500 GMT after
trading at 18.38 pounds before the FEMSA deal.

Colombia is pushing through the tax rises to fund its health
service spending, and plans to push VAT on beer up to 16 percent
by January 2011.

Stock Research
(Reporting by David Jones; Editing by David Cowell)

SABMiller Colombian beer vols to dip after tax rise