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Beer maker AB InBev pumps up the volume in Africa

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JOHANNESBURG/BRUSSELS/LONDON (Reuters) – Sitting outside the dilapidated Vimba tavern in Johannesburg’s township of Alexandra, Patrick Mashego SIP from a one-litre bottle of Carling Black Label, South Africa’s most popular beer.

A woman serves a one-Liter bottle of AB Inbev Carling Balck Label beer in a bar in Cape town, South Africa, may 11, 2018. Image 11 May 2018. REUTERS/Mike Hutchings

Rolled out of AB InBev (ABI.BR) across the country this year, the larger bottles are part of a plan to lure the world’s largest brewer price bride-to-be-conscious South Africans for its mid-market Beers and way of bargain rivals, or at home.

AB InBev move marks a departure from his typical playbook of increasing margins and profits primarily due to the higher price levels, and strict cost control, tactics refined by his close Association with private-equity firm 3G Capital.

It is also the clearest sign yet to conquer, such as AB InBev’s objectives and the rest of Africa, after you catch a big foot on the continent through the purchase of the largest global rival SABMiller in the year 2016.

On a continent where the average person has 10 liters of beer to drink in a year – compared with 75 liters in the United States and 66 litres in Brazil – to the establishment of its premium brands and the sale of large quantities of mid-tier will be Beers of the key, as a break-in in the countries ruled by other Breweries.

“Clearly, there is room for the manufacture of our products is present. This is definitely a big part of our efforts here,” said Ricardo Tadeu, AB InBev African zone President. “Compared to where we have been, these markets are still in development.”

AB InBev is trying to protect you and to expand its mid-tier brands, with the help of the discount and promotions, as their work horses during the time, the win it needs its international premium-lager, Budweiser, Stella Artois and Corona, and market shares.

But since AB InBev is a range of premium Beers for the high-end of the South African market has already, it is also free as a theme to push brands such as Carling and castle deep in to the mainstream market.

The Vimba tavern, Mashego, 33, who spends most of his time on scouting for recyclable garbage to live, seems to be sold to AB InBev-strategy. To 19 rand ($1.54) for a one-litre bottle, Mashego, pays about 20 percent more than for 750 ml bottles, but a third gets more beer.

“That’s all I drink now,” said Mashego, sitting next to a friend also swinging beer from a liter bottle.

SABMiller is the African presence as the most important price in stagnate AB InBev $107 billion acquisition of the second largest brewer in view of the potential for growth on the continent as beer sales in other regions.

Bernstein analysts estimate African beer market was worth $10.8 billion of net sales in the year 2016, or 7 percent of the global total, and they see it as the world’s most attractive region for long-term volume and profit growth.

If AB InBev, SABMiller, bought the predictions that the beer sales would grow in Africa, quoted, almost three times the rate between 2014 and 2025. About one-fifth of industry sales in Africa and a quarter of the profits come from South Africa.

As part of its new strategy, AB InBev his Band builds to play with more frequent discounting for Carling and other local favorite, lock, retailers say.

On the Zio-liquor store in Sasolburg, about 80 km (50 miles) South of Johannesburg, shoppers, trolleys pushed in, Laden with a castle on promotion in the last month for the freedom day celebrations on the occasion of South Africa’s post-apartheid elections in April 1994.

“It’s a steal,” said one of the buyers in the mining town when he picked up an 18-pack next to a sign with the inscription: “Buy 12, and 6 free extra.”

Although AB InBev has a more than three-quarters of South African controlled niche market, according to Euromonitor International, liquor store owners say that promotions have become more common than SABMiller.

“We get them once per quarter, now it’s more like a month,” said one of the five Johannesburg liquor-store-owner to tell Reuters that it had seen a jump, since AB InBev took over.

The actions were said the most intense, towards the end of 2017, a liquor store owner.

“There were offers, which is almost a week … crazy stuff,” said the dealer in Vanderbijlpark close to Sasolburg, adding that AB InBev appeared in “the war”, with his closest rival Heineken (HEIN.AS) in the run-up to Christmas.

The Dutch beer manufacturer, the controller 7 percent of the South African beer market, has been gaining market share since last year, mainly due to its Heineken lager beer is a favorite among the country elite.

But it was just in the mainstream sector, with Soweto Gold, which it launched at the end of last year, as well as a major boost for their well-established Board brand. It is also the Roll-out of different bottle sizes.

“Both AB InBev and Heineken have an ambitious growth strategy. This is a very intensive advertising activity,” said Heineken South Africa-Chef Ruud van den Eijnden.