SOUTH AFRICAN BREWERIES plc

The SAB group comprises a diverse portfolio

of businesses, operating in a wide range of countries

and cultures. The group mission and statement

of values and principles are based on, and take into

account, standards already set by our operating

companies. The group has designated an inner core

of non-negotiable values with regard to integrity,

honesty and our responsibilities to society;

the operating companies may specify additional

standards relating to their specific circumstances.

Through this process, SAB has ensured that

there is consistency across the group, which enables

us to communicate to the outside world what

we stand for. The group’s values and principles are

stated, and treated, as the reality

rather than a distant ideal, but we recognise the

inevitability of lapses and shortcomings.

We commit ourselves to learning from mistakes

and to continuous improvement.

SOUTH AFRICAN BREWERIES plc

The Mission summarises our overall purpose as a group.

Each operating division within the group also defines its own

divisional goals to give practical effect to this Mission.

SAB is an international company committed to achieving sustained

commercial success, principally in beer and other beverages, but also

with strategic investments in hotels and gaming. We achieve this by

meeting the aspirations of our customers through quality products and

services and by sharing fairly among all stakeholders the wealth and

opportunities generated. Thereby, we fulfil our goals of business growth

and maximised long-term shareholder value, while behaving in a socially

responsible and progressive manner.

62.1 mTotal beer volumes up 18%to 62.1 million hectolitres

9.0 mSAB’s corporate social investment in local communities amountedto US$9 million – 1.4% of pre-tax profit

6.0 hl/hlAverage water consumption rate for clear beer downto 6.0 hl/hl beer produced

M I S S I O N S TAT E M E N T

C O M PA N Y VA L U E S

As we apply the Mission, our Comp

in the business – our stakeholders

C O N T E N T S

g 1. We conduct our business with integrity, respecting all

applicable laws.

g 2. We are straightforward and honest in the commitments we

make: seeking mutually beneficial and enduring relationships;

and being open and accurate in our communication.

g 3. We respect the rights and dignity of individuals. We value

cultural diversity and promote inclusivity through employee

participation and empowerment.

g 4. We optimise the creation of wealth to provide fair reward, and

recognition, for the contributions of all our stakeholders.

g 5. We create and sustain a safe and healthy working environment

that, in addition, provides job satisfaction and the development

of each employee’s potential.

g 6. We provide products and services of uncompromising quality to

meet the needs of our customers.

g 7. We are a responsible corporate citizen and fulfil our

responsibilities as an integral member of society. In our

business decisions, while asserting our right to trade freely, we

give appropriate consideration to social and environmental

impacts.

g 8. We expect these company values to be upheld by all

employees and by the third parties we engage to act on our

behalf, such as our suppliers, contractors and other agents.

In joint ventures, we seek to ensure that our business partners

apply these values.

Chief Executive’s Review 1

Core Business Activities 2

Corporate Accountability and Governance 4

Economic Report 10

● Cash Value Added

● Shareholders

● Franchisors, Joint Ventures and Minority Shareholders

● Customers and Consumers

● Suppliers

● Governments

Social Report 26

● Employees

● Social Aspects of Alcohol and Gaming

● Communities

Environmental Report 38

External Commentary 48

Index to GRI Indicators 49

Incorporated in England and Wales under the Companies Act, 1985

Registration number 3528416

SOUTH AFRICAN BREWERIES plc

pany Values guide us in our relations with all those who have a direct interest

– and inform the Business Principles which govern those relationships.

C o r p o r a t e C i t i z e n s h i p R e v i e w

3 1 M A R C H 2 0 0 1

The usual chief executive’s foreword – trotting out the mantra of the

‘win-win’ virtuous circle of corporate citizenship, where social

responsibility is good for business and business success is good for

society – is in danger of becoming a cliché.

Though the sentiment is undoubtedly true, in practice it is not as simple

as it sounds. South African Breweries began one hundred years ago in

Johannesburg. Today we operate in over 25 mainly developing and

emerging markets. Trying to be a good corporate citizen in the global

economy is more complex than ever.

Our people fight a daily battle to get top quality products to our

customers on time, and are expected to outperform the competition.

They constantly have to balance the immediate demands of the

market with our long-term duties to stakeholders – to investors, a fair

return; to employees, a safe and rewarding job; to suppliers, fair

dealing; to governments which tax and regulate us, open and honest

relations; to local communities and wider society, a commitment to

enhance the environment and work for the common good.

Cliché though it may be, a ‘win-win’ for business and society is more

often than not an elusive pursuit: it can never simply be taken for granted.

However, if we get the balance right in each individual business

decision we take – weighing the economic, social and environmental

consequences, now and for future generations – then in the long-term

there need be no trade-off between commercial success and social

responsibility.

That is a challenge I commend to you, as you read this, our fourth

corporate citizenship report, to see the efforts we are making to strike

the right balance.

GRAHAM MACKAY

Chief Executive

18 June 2001

“. . . there need be no trade-off between

commercial success and social

responsibility”

Chief Executive’s Review

Corporate Accountability and Governance

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GOVERNANCE

For SAB, good corporate governance

implies that the board should lead

business practice

in a way that not

only maintains,

but enhances,

the company’s

licence to operate.

In practice, this

requires a

broadening of the

traditional concept

of corporate

governance beyond regulatory

compliance and accountability to the

owners of the business. In our view,

this does not diminish the fundamental

importance of legal and shareholder

issues; in fact, the responsibility of

directors and staff to address our

broader constituency of stakeholders is

unquestionably in the long-term

interests of the company – and

ultimately, of the societies in which we

operate. Our products, services and

conduct have an impact on our

stakeholders, giving rise to perceptions

that influence our reputation and, over

time, our shareholder value.

Corporate governance is essentially

about efficient, honest, responsible and

accountable leadership. As such, it

makes sense from a corporate

perspective that governance is the lead

agent – not only in consolidating

aspects of corporate citizenship,

corporate social responsibility and

“I believe that SAB has made good progress in the

area of Corporate Accountability over the past year.

The company involves its non-executive directors

closely in this field, and welcomes their independent

contribution in monitoring both process and

performance.” Lord Fellowes Non-Executive Director and Chairman of the Corporate Accountability and Risk Assurance Committee

Outgoing Executive Corporate AccountabilityCommittee

From left (seated): Alan Clark, GrahamMackay, Malcolm Wyman, Pete Lloyd;(standing): Andrew Tonkinson, Nigel Cox,Alison Ramsden, André Parker, RobertFellowes, Mike Simms and Norman Adami

sustainable development – but also in

integrating these agendas into

mainstream business activities.

To give weight to this philosophy,

SAB has been developing systems

progressively for accountability over

several years.

In the initial stages, this process was

overseen by an executive corporate

accountability committee. It

spearheaded the drive toward best

practice in ethical, social and

environmental accountability through

the advancement of value statements,

business principles, policies and

related guidelines. In addition, this

committee (which continued to

function until 31 May 2001) determined

the scope of internal and external

reporting mechanisms, which measure

performance and compliance, and

contribute to the measurement and

control of operational and

accountability-related risk. SAB’s

commitment to good corporate

citizenship through this committee was

enhanced by the fact that its

membership comprised the chief

executive, chief financial officer,

managing directors of each of the

operating units, and a number of other

senior group executives – with

independent non-executive director,

Lord Fellowes, in the chair.

South African Breweries Corporate Citizenship Review

5

SAB PLC CORPORATE ACCOUNTABILITYSTRUCTURE AND PROCESS

AssuranceProcess

ManagementProcess

ReportingProcess

SAB plc Board

SAB plcAudit

Committee

SAB plc CorporateAccountability and

Risk AssuranceCommittee“CARAC’

GroupExternal

Audit

Internal AuditReporting

Mechanism(Under review)

InternalAudit

WorkingCommittee

InternalAudit

ExternalAudit

Audit/AssuranceCommittee

Group CorporateAccountability

DepartmentGroup Finance

Department

AccountabilityWorkshopCommittee

Business UnitFD

Business Units

Managing DirectorDivisional Board

SAB plc Excom

The Board:

● The board of directors

currently comprises five

executive and ten non-

executive directors.

● The roles of the chairman

and chief executive are

separate with responsibilities

divided between them.

● All directors are subject to

retirement and re-election by

shareholders every three

years.

● The executive directors

generally have responsibility

for making and implementing

operational decisions.

● Non-executive directors

complement the skills and

experience of the executive

directors, contributing to the

formulation of policy and

decision-making through the

knowledge and experience

of other businesses and

other sectors.

● All directors have access to

the advice of the group

secretary and independent

professional advice is

available to directors in

appropriate circumstances

at the company’s expense.

As of 1 June 2001, the outgoing

executive committee is replaced

with a newly constituted board

committee, the corporate

accountability and risk

assurance committee (CARAC).

CARAC is chaired by Lord

Fellowes and comprises four

non-executive and three executive directors.

The other nominated non-executive

members include Messrs Kahn and

Ramaphosa, while the executive members

are Messrs Mackay, Wyman and Adami.

Its main objective is to assist the board in

the discharge of its duties relating to

corporate accountability and associated risk

in terms of the direction, assurance and

reporting for the group. The committee will

also provide independent and objective

oversight, and will review information

presented by management on corporate

accountability and specifically associated

risk, taking account of reports by

management and the audit committee to

the board on financial, business and

strategic risk.

As in the past, this new committee will

continue to utilise the services of the group

corporate accountability department to

progress its activities, as well as co-opting

management and technical specialists in bi-

annual accountability workshops, to ensure

the representation and participation of all of

the business units within the group.

Board Committees:

The Audit Committee

● The audit committee, which meets no fewer than three

times a year, is chaired by a non-executive director,

Mr Collum.

● The audit committee reviews at least annually, with

management, that adequate and appropriate internal

controls are in place and are appropriate to meet future

needs; that significant business, statutory and financial

risks have been identified and are being monitored and

managed; that appropriate standards of governance,

reporting and compliance are in operation; and it

advises the board on issues relating to the application of

accounting standards to published financial information.

The Nomination Committee

● The nomination committee, chaired by Lord Renwick,

considers the composition of the board, retirements and

appointments of additional and replacement directors

and makes appropriate recommendations to the board.

The Remuneration Committee

● In addition to assessing and approving senior executive

pay structures, the committee’s overall strategy is to

ensure that employees are rewarded for their contribution

to the group’s operating and financial performance, as

well as the requirements of collective bargaining.

● The remuneration committee is chaired by Lord Renwick.

The Corporate Accountability and Risk Assurance

Committee (with effect 1 June, 2001)

● Meets twice a year and is chaired by a non-executive

director, Lord Fellowes.

● Assists the board in the discharge of its duties relating

to corporate accountability and associated risk in terms

of the direction, assurance and reporting for the group.

● Provides independent and objective oversight and

review of the information presented by management on

corporate accountability and specifically associated

risk, also taking account of reports by management

and the audit committee to the board on financial,

business and strategic risk.

The newly constituted board committee, CARAC.

Norman Adami, Meyer Kahn, Malcolm Wyman, Graham Mackay, Cyril Ramaphosa

and Robert Fellowes

C O R P O R A T E A C C O U N T A B I L I T Y

A N D G O V E R N A N C E

continued

THE ACCOUNTABILITYPROCESS

In this year’s review we continue to

report against our present

framework of some 90 key

performance indicators (KPIs),

covering economic, social, ethical

and environmental aspects of

corporate performance. These

measures, and other aspects of the

framework, are currently being

scrutinised, to ensure that they

remain relevant and add value to our

businesses, conform where possible

to external voluntary standards and

meet the expectations of our

stakeholders. As the SAB group

expands into new and mainly

emerging markets, we need to take

into account the varying degrees of

maturity of the different business

units. As a result, the time spent on

the review process, although

valuable, has been longer than

originally anticipated. This has

delayed greater attention to the

performance aspects that the

discipline demands.

Internal reports, based on a

selection of 30 core KPIs, are

collated quarterly and presented half

yearly for consideration by the

board. For the purpose of internal

reporting, all businesses where

SAB has significant management

influence or management control are

incorporated. This is a broader

definition than that used in the

Annual Report and Accounts, where

associated companies, for example

China, have a

different accounting

treatment. For

external reporting,

there is a two-year

exemption for

operations newly

acquired or built; as

such, for this year’s review, our

operations in India are not included.


7

Accountability Workshop Committee

RESEARCHING – REVIEWING BESTPRACTICE

• Defining The Scope

• Reviewing Valuesand BusinessPrinciples

• Assessing andIncorporating ExistingSystems

PLANNING THE PROCESS

• Identifying Stakeholders

• Defining Impacts and Issues

• Identifying Performance Indicators

• Developing the Measures

• Strengthening Awareness andInvolvement

EVALUATION OF PROCESS ANDREFINING OF SYSTEMS

• Setting the Targets and Benchmarks

• Strengthening Internal ReportingNetworks and Information Flows

• Checking for Completeness,Comparability, Reliability and Materiality

reporting. The

recent UK

Pensions Act

requires trustees

of occupational

pension

schemes to

disclose their

policy on

socially

responsible

investment

(SRI). Guidelines

published by the

UK government

are encouraging

environmental

reporting, while

the Foreign and Commonwealth

Office is promoting the goals of

corporate citizenship.

Non-governmental pressure

groups are increasingly active

in their particular sectors.

International efforts are growing

to enhance the quality of reporting,

notably the Global Reporting

Initiative (GRI), the Institute for

Social and Ethical Accountability’s

AA1000 standard, and the

ambitious effort by the British

Standards Institute and others

(with UK government support)

to devise a comprehensive

approach complying with ISO

standards through the SIGMA

initiative.

INTERNATIONALDEVELOPMENTS

With the steep rise of external

interest in, and pressure for,

corporate accountability, it

might be assumed that

companies are primarily reacting

to external factors rather than

following their own values,

economic purpose or performance.

In reality it is a balance between

these two approaches that is driving

the process forward.

In the first instance, governments

are playing an active role in

influencing the business agenda.

This can be seen in proposals in the

current UK Company Law Review,

broadening the scope of mandatory

C O R P O R A T E A C C O U N T A B I L I T Y A N D G O V E R N A N C E continued

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FRONT COVER

A n n u a l R e p o r t

3 1 M A R C H 2 0 0 1

Web site references:

Association of British Insurers www.abi.org.uk

Company Law Review www.dti.gov.uk/cld/review.htm

Department of the Environment,

Transport and the Regions www.detr.gov.uk

Foreign and Commonwealth Office www.fco.gov.uk

Global Reporting Initiative www.globalreporting.org

Institute for Social and

Ethical Accountability www.AccountAbility.org.uk

Sigma www.projectsigma.com

SustainAbility www.sustainability.co.uk

The Corporate Citizenship Company www.corporate-citizenship.co.uk

United Nations www.un.org

United Nations Environment Programme www.unep.org

South African Breweries plc www.sabplc.com

C o r p o r a t e C i t i z e n s h i p R e v i e w

3 1 M A R C H 2 0 0 1

In our approach, we have applied

elements of AA1000 as well as the

GRI’s guidelines, although not in the

prescribed technical format, since

our own report aims to serve a

broader audience of stakeholders.

We have also taken note of many

other voluntary standards of best

practice, including the initiatives of

the United Nations and the

Commonwealth and, more recently,

the impending guidelines of the

Association of British Insurers.

In addition to this review, we articulate

our approach and performance to

interested parties directly, or by means

of completing questionnaires – the

majority of which come from investors

and fund managers. A growing number

of ratings agencies seek to rank

companies according to their non-

financial performance. This year, SAB

has made application for endorsement

with two of the major indices and

participated for the first time in

Business in the Environment’s Index of

Corporate Environmental Engagement.

These efforts to interact with

external stakeholders are not meant

to be indicative of end goals, but

rather to reflect our ongoing internal

progress towards achieving our

company’s mission and values.

In a first-ever survey of global

sustainability reporting, undertaken

as a joint UNEP/SustainAbility

project, SAB plc was ranked 20 in

the world, scoring 84 out of a

possible 196 points. The detailed

rating was applied to 50 leading

reports, selected from 200 reviewed.

The assessment focused on the

business context for sustainable

development, commitments made

and management quality, as well as

economic, social and ethical, and

environmental performance,

accessibility and assurance.

In the overall ratings, SAB received

top scores in both the economic

and the social and ethical

categories. In its assigned industry

sector (consumer), it added a further

leading place in management quality

– by including governance,

accountability and management

systems in its report.

The trend in the other reports

reviewed in this sector was for a far

stronger performance on

environmental aspects, rather than

social and ethical or economic

performance. Here SAB scored less

well, mainly due to pressing social

development needs in emerging

markets, where SAB operates.


9

UNEP/SustainAbility Global ReportingSurvey – SAB plc ranked 20 out of50 leading reports, selected from

200 reviewed

Economic

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Above all else, South African Breweries is a business. It exists to achieve sustained

commercial success and maximise long-term shareholder value, while behaving in a

socially responsible manner. Every day around the world, SAB people work to satisfy

the needs of our many customers and

consumers, bringing them enjoyment

through our beer and other beverage

products and our leisure interests in

hotels and gaming.

This activity creates wealth for more

than 40,000 people employed in

subsidiary and associated companies

and for their dependants too. It

sustains many thousands of jobs in our

suppliers and business partners,

perhaps as high as three quarters of a

million around the world. From the

wealth created, governments take a

share, directly through excise duties,

“SAB is the world’s leading emerging market

brewer, contributing to the development of local

economies in the 25 countries in which

we operate.” Malcolm Wyman Chief Financial Officer

Components of Value Added and Distributed

NET CASH GENERATED STAKEHOLDERS

● Sale of products ● Customers/consumers

● Payment for supplies and services ● Suppliers

● CASH VALUE ADDED

CASH UTILISED

● Remuneration ● Employees

● State and excise taxes ● Government

● Social investment ● Community/environment

● Interest/finance costs ● Lenders

● Dividends ● Shareholders

● CASH DISBURSED

CASH UTILISED

● Funding of growth and replacement ● Management

betting levies, sales taxes and taxes on

our profits, and indirectly by taxing our

employees’ incomes; in all, around

US$1.1 billion last year.

After paying these taxes,

compensating employees, paying

lenders for sums borrowed and making

a contribution to the community

through corporate social investment,

shareholders are entitled to the

remaining balance – some is taken as

dividends and some retained in the

business for growth and further wealth

creation for the benefit of all

stakeholders in the future.

Economic impact – at a glance● total shareholder return since London listing in March 1999,

10.7%

● new strategic partnerships formed in Africa and China

● record high payments to governments – US$ 855 million in

tax and excise duties. (Including indirect employees’ tax –

US$ 1.1 billion)

● US$ 331 million in net capital expenditure

● maintained creditor’s days at 51

● 2,359 job losses through retrenchment, down on last year

● strong ethics and anti-bribery policy enhanced

Our economic business principles– in brief

Investors and joint venture partners

● maximise total shareholder return, achieving a compound

growth rate in dividends and share price which betters

comparable investments

● an open governance process, meeting legal requirements

and best practice

● communicate regularly and openly, providing reliable and

timely information

● do business with joint venture partners and franchisors

who share our values, while respecting the values and

cultures of the countries in which we operate

Customers and consumers

● brands and services of consistent and uncompromising

quality and value, always safe for their intended use, so

meeting the needs and standards of our consumers and

industry customers

● in pursuit of free market competition, not commenting

unfavourably on the products, management or operations

of competitors, nor seeking to prevent others from

competing freely, within applicable competition laws

Suppliers and contractors

● meeting legal and contractual obligations, including

paying bills on time; working together to achieve the

highest standards in materials and services supplied

● encouraging diversity, particularly by involving

disadvantaged people, minorities and local firms

Governments and wider society

● complying with the law and other regulations and, while

protecting commercial interests and influencing

government policies, not engaging in party political

activity

● seeking a positive impact on local economies, through

profitable and sustainable commerce

SAB’s corporate accountability framework is based on acomprehensive set of 26 detailed Business Principles, coveringeconomic, social and environmental impacts (see www.sabplc.com).

CASH VALUE ADDED

By law, conventional company accounts must present the financial effects of this

wealth creation through a profit and loss account, showing the earnings due to the

owners of the business. An alternative way to present the information, and the role all

stakeholders play, is through a cash value added statement.

Value is created by transforming bought-in resources through human and

technological skills into products customers want to purchase. The cash value added

is the surplus after suppliers have been paid for these goods and services. The cash

value added statement shows how that is distributed to employees, who provided

their skills and labour, to lenders and shareholders, who supplied the capital funds, to

governments and local communities, and that retained in the business.

In the year to 31 March 2001, SAB’s cash value added from continuing operations,

was maintained at US$2 billion.

Governments took a larger share (up from 38% to 42%) and more was paid out to

shareholders (up from 4% to 12%). Less was retained in the business (down from

24% to 20 %) and employees’ share fell (from 30% to 21%), partly due to the trend

towards world class manufacturing and the consequential increase in capital intensity.

Our corporate social investment spend of US$9 million, accounted for 0.4% of the

distribution of value added (1.4% of pre-tax profit).

E C O N O M I C continued

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Employees 20.9%

State Treasuries 42.3%

Lenders 3.8%

Shareholders 12.3%

Retention for future growth 20.3%

Corporate social investment 0.4%

SAB MAINTAINS AN EQUITABLEAND BALANCED DISTRIBUTION OF

VALUE ADDED AMONG ALL THESTAKEHOLDERS IN THE BUSINESS


13

GROUP CASH VALUE ADDEDfor the year ended 31 March 2001

2001 2001

US$m Rm

Net cash generated

Customers and consumers

Cash received by SAB for the supply of its products

and services 3,678 26,980

Suppliers

Cash payments outside the group for materials,

facilities and services purchased (1,659) (12,169)

Group cash value added 2,019 14,811

Distribution of cash value added

Remunerate employees for their services 421 3,088

Pay direct and excise taxes to state treasuries 855 6,271

Provide lenders with a return on borrowings 76 555

Provide shareholders with cash dividends 248 1,824

Corporate social investment (1.4% of pre-tax profit) 9 65

Cash retained in the business to fund future growth 410 3,008

2,019 14,811

SHAREHOLDERS

Investors provide the long-term

operating funds which, together with

borrowing, allow the company to make

capital investments. They have the

responsibility of owning the business

and only earn a return once the other

stakeholders – notably employees,

suppliers and governments – have

been paid.

The best measure of the value which a

company returns to its owners is total

shareholder’s return (TSR) – the

combination of share price appreciation

and dividends paid over the medium to

long term. Since SAB’s primary listing in

London in March 1999, the company

has returned 10.7% (5.2% pa). During

the year covered by this report, the

share price as quoted on the London

Stock Exchange fell 6.3%, at a time

when the FTSE Index dropped by 13.9%.

In the year under review, SAB’s net

capital expenditure was US$331 million

around the world.

OPEN ANDACCOUNTABLE

SAB operates an open governance

process, in which we not only meet

legal requirements, but also aspire to

best practice in corporate governance.

Our business principles commit us to

regular and open communication,

providing reliable and timely

information. The company’s London-

based investor relations (IR) function

organises site visits and seminars for

investors and analysts, recently

covering central Europe and China,

and with plans for Africa. In November

2000, it launched a new section of the

corporate website (www.sabplc.com)

devoted to IR enquiries.

During the year under review, there

were no unresolved disputes with

regulatory bodies or any instances of

non-compliance with relevant

government practices. Our

commitment to open and accountable

governance and communication

extends to minority shareholders in

group companies. Even within unlisted

group companies, governance

conforms to local legal requirements

and sometimes exceeds local norms.

FRANCHISORS, JOINTVENTURES ANDMINORITYSHAREHOLDERS

An important element of SAB’s

international growth strategy is forming

strategic relationships with joint venture

partners. These can take three forms.

One is through franchise agreements,

such as Beer South Africa brewing

Amstel and Heineken under licence, or

our bottling relationship with Coca-

Individuals 11,285 2.18

Category No. %

Pension and provident funds 35 0.53

Banks, nominees andfinance companies 1,228 66.07

Insurance companies 10 20.46

Other corporateentities 164 10.52

13,098 100.00

Trust funds andinvestment companies 376 0.24

SAB plc ORDINARYSHAREHOLDING ANALYSIS

Number of shareholders in each main categoryand % held by category


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KEY STATISTICS ONSHARE OWNERSHIP

Delegates at the SAB seminar in Londonon the company’s operations in China

Cola in several southern African

countries.

The second is through jointly-owned

companies where SAB generally

maintains management control and

partners have a minority holding.

A notable exception is our joint venture

in China, CRE Beverage Ltd, in which

we have a 49% holding, alongside

China Resources Enterprise Ltd – a

Hong Kong listed company and

constituent of the Hang Seng Index.

China is widely acknowledged as the

second largest beer market in the

world, after the USA.

Then there are broad joint ventures,

such as the strategic share exchange

between SABI Africa and the Castel

group, which operates largely in

francophone Africa. Announced in

February 2001, it took effect

subsequent to the current

financial year.

Such joint ventures bring cost savings

and opportunities for expansion

through valuable insights into local

market conditions. Depending on their

structure, they can offer a way to share

the wealth created with local providers

of capital. They also raise questions, in

our corporate accountability process,

about the extent to which SAB

business principles and values should

be applied, and adherence assessed.

In many of SAB’s markets, standards

of corporate behaviour are not yet well

developed and there is a sensitivity

about perceived outsiders ‘imposing’

their norms.

There are five elements to our

approach. First, we will not enter

partnerships where there is potential

for a fundamental conflict. SAB is clear

that it will not compromise its values in

pursuit of short-term business goals.

Second, once agreed, we openly

declare the names of our partners, their

holdings and the nature of the venture,

so that all SAB’s stakeholders can trust

the integrity of the process.

Third, all businesses where SAB has

significant management influence or

outright control must take part in the

quarterly accountability process,

assessing performance against the

26 Business Principles.

Fourth, we treat all external

shareholders, including minority

shareholders in unlisted companies,

not just in accordance with the letter of

the law, but in keeping with the spirit of

open governance, which characterises

our approach to our own shareholders.

Fifth, where operational management is

not our direct responsibility, we will

nonetheless keep our partners’

performance as corporate citizens

under scrutiny.


15

Capital investment:IbhayiBeer South Africa’s newest

brewery, Ibhayi, in the Eastern

Cape, officially opened in

March 2001. Costing

R630 million (US$90 million), it

has a capacity of 2.3 million

hectolitres a year and employs

a production staff of 120. It is

fully compliant with ISO 14000,

the environmental manage-

ment standard.

Sixty per cent of the construc-

tion costs were spent in

South Africa, with more than

R155 million (US$22) million in

the immediate locality – a third

of this with disadvantaged

communities. Hundreds of new

jobs were created during the

construction phase and

contractors had to ensure

those recruits received full

training to help them succeed

in the labour market once work

was complete.

SAB’s principal

subsidiary and

associated

undertakings

listed in their

countries of

incorporation:

SAB effective

interest in

ordinary share

capital

● Accra

Brewery Ltd,

Ghana 69%

● National

Breweries plc,

Zambia 70%

● Tanzania

Breweries Ltd,

Tanzania 66%

● Zambia

Breweries plc,

Zambia 90%

● Amalgamated

Beverage

Industries Ltd,

South Africa 74%

● Delta

Corporation Ltd,

Zimbabwe 23%

● Distell

Group Ltd,

South Africa 30%

The 2001 review examined the extent

of dialogue on corporate accountability

issues within joint ventures and each

group company reported on any known

conflicts between SAB’s principles and

those of the partner. No instances of

substantive conflict were cited. In some

cases, statements of corporate

principles and values are actually

included in formal documentation; for

most this remains a matter for dialogue.

CUSTOMERS ANDCONSUMERS

SAB’s success as a commercial

enterprise rests on continuing to satisfy

its customers. Each day all around the

world every one of our products and

services faces competition, both from

rival brands and from other types of

leisure activity. If we cease to offer the

highest standards of quality and

outstanding value for money; if we fail

to promote our products effectively or

to innovate and improve continuously; if

we abuse the position we have built in

many of our markets; if we allow

employees to damage our reputation

through corrupt practice, then the

business will suffer, and with it the

wealth created for all our stakeholders.

Those who criticise business behaviour

and call for greater corporate account-

ability sometimes overlook the

centrality of the consumer in all we do.

In a competitive free market global

economy, among our primary

stakeholders, consumers are important


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16

SAB’s franchise partners include:● Heineken – Amstel and Heineken are brewed under licence in South Africa

● The Coca-Cola Company – ABI is Coke’s largest bottler in southern Africa

● Bass Hotels and Resorts – Southern Sun operates Inter-Continental and

Holiday Inn hotels in South Africa

● Accor Hotels – Southern Sun also operates Formule One hotels in

South Africa

ABI’s Phoenix bottling plant near Durban

arbiters of good corporate citizenship,

through their perceptions of our

behaviour. As a customer-focused

company, SAB has nothing to fear from

greater scrutiny, as we are accountable

to our customers every day in the

market place. Here we offer an

account of how we perform against our

stated business principles.

CONSUMER ATTITUDES

Virtually all SAB’s beverage products

reach the end-consumer through

intermediaries, such as bars and

restaurants, wholesalers and retailers.

This distribution is increasingly

outsourced and so, despite stringent

procedures, the final quality cannot

always be guaranteed absolutely. That

is why all group companies (bar one)

not only address immediate customer

complaints, but have developed

systematic procedures to respond to

comments or complaints from end-

consumers.

As part of the accountability review, the

level and type of consumer comments

around the world are monitored,

revealing wide variations in the degree

to which consumers choose to or are

able to exert their rights. SC Ursus in

Romania, for example, received only

seven complaints in total during the

year, out of 190 million bottles

produced. In Mozambique, Cervejas

de Moçambique has a

customer complaints and

product defect recording

system to monitor the

incidence of dissatisfaction. This found

only one complaint of any sort on

average for every 400,000 bottles

produced.

Beer South Africa’s monitoring

system actively encourages contact,

with a free telephone ‘care line’ for

customers to request information on

products, services or promotions as

well as to register complaints. The

number is displayed on all the labels on

bottles and cans produced by SAB Ltd.

SAFETY AND QUALITY

In addition to rigorous local controls

and SAB’s own groupwide internal

standards, SAB companies are

increasingly adopting externally

certified quality systems. In South

Africa, our Prospecton brewery added

to its long standing ISO and NOSA

awards to become the first in Africa to


17

Dreher being delivered to a customerin central Budapest

Consumer in Maputo enjoying the leading brand, 2M, produced by Cervejas de Moçambique

receive HACCP certification, an

international food safety system, which

identifies potential hazards and tests

controls.

In addition, group companies are

increasingly putting in place

precautionary ‘crisis and emergency’

plans, so as to respond swiftly in the

unlikely event of product

contamination. This year, the number

of countries with such plans has risen

to cover all beverage production.

PROMOTINGCOMPETITION

In SAB, we are proud of our products

and services and vigorously promote

them, always seeking opportunities to

achieve growing sales. We believe in

free competition as the most effective

way to secure the long-term prosperity

of all our stakeholders. Equally, we

recognise this commitment means that

we must not abuse our market position

or unfairly prevent others from

competing too. Within applicable

competition laws, group companies are

prohibited from commenting

unfavourably on the products,

management or operations of

competitors.


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18

Total Quality Management (TQM) at CompañiaCervecera de Canarias (CCC):

CCC has long made a priority of quality control. In 1997 it was one of the

first of the SAB companies to obtain the independently certified ISO 9002

award. Since then cross-functional TQM teams of employees have

generated a stream of innovations and improvements.

Over 20 such groups operated during the last year. A Continuous

Improvement Committee is also in place: of the 209 suggestions made this

year, 48 were accepted.

Last year, the company joined the European Foundation for Quality

Management and is now applying the EFQM ‘business excellence’ model

to drive performance up to the best European levels. The company

is sponsoring a new benchmarking group, with 20 leading European

companies, including Nokia, Unilever, Yellow Pages UK, Volvo and Siemens.

Historically, we have used the

South Africa-based National

Occupational Safety Association

(NOSA) system for safety

management.

Its top perfomance levels (Noscar

and 5 Star) are now being

made compatible

with the internationally adopted

ISO standards.

Noscar 13 26%

Numberof sites

5 star 29 58%

4 star 4 8%

Not graded 3 6%

Lapsed 1 2%

BEER SOUTH AFRICA:NOSA GRADINGS

The new KHS bottling line at Lech Brewery – fully covered to optimise product safety

The malting laboratory at Pilsner UrquellBrewery in the Czech Republic

SUPPLIERS

SAB companies paid US$1.7 billion

during the year to their suppliers.

Spending that money effectively,

controlling costs and ensuring

quality are vital to our competitive

position. Equally, how we direct

that purchasing power is part of

being a good corporate citizen, with

the potential to have a positive impact

more widely throughout society.

Our starting point is to meet

contractual obligations and to pay bills

within agreed terms, as cash flow is

often vital to the survival of small and

growing firms. Payment terms are

agreed at local level, as appropriate for

As part of this year’s

accountability review, group

companies were asked to

report any issues with

competition authorities: the

only one was South Africa

where the Competition

Commission launched an

investigation into the liquor

industry in November 2000. A further

investigation began in February

2001, looking at terms of trade with

inter-depot contractors. Beer South

Africa is confident of the correctness

of its trading position and expects

both investigations to be resolved

satisfactorily.


19

New products and innovations at local level:

Redd’s was introduced successfully into the Polish market during the year,

exceeding its budgeted market share within 10 months. Although based on an

established SAB concept, the product was adapted to meet the local market,

with different positioning, pack design and consumer communication.

In Tanzania, a new apple-

flavoured alcoholic fruit

beverage brand, 49er, was

successfully launched, having

been fully developed and

researched locally.

Meanwhile in Mozambique, a

previously

imported brand, Castle Milk

Stout, has been switched

to local production.

Appletiserprecautionaryplans:Appletiser has drawn upcomprehensive contingencyplans and crisis managementpolicies to cover a range ofeventualities, including productrecall, fire, strikes andstoppages, public defamationand natural disasters. Theseprocedures have been madeavailable for staff to consult,should particularcircumstances arise. Thedocuments outline thefunctional responsibilities ofthe various departments andthe objectives any responseshould attempt to achieve;they provide a detailedexplanation of who should bedoing what in the event of eachpossible crisis. Also listed aremembers and contact detailsfor the crisis managementteam, in order that expert helpcan be easily reached at theearliest opportunity.

Taking product recall as anexample: information is providedon the objective of any action,the possible sources of infor-mation regarding the need forrecall, the circumstances likelyto require a decision, the iden-tification of stock, and commu-nication and press relations,among others.

0

1

2

3

4

5

6

7

90+80to89

70to79

60to69

50to59

40to49

30to39

20to29

10to19

0to9

DISTRIBUTION OF OPERATING UNITS CREDITOR’S DAYS

Number of days

Num

ber

of o

pera

ting

units

each supplier. Group companies report

average payment times, expressed as

a number of ‘creditor days’ typically

around a month, but ranging from

fewer than 10 to as long as 90 days for

some specialist contracts. As reported

in our previous review, groupwide

creditor’s days was maintained at 51.

DEVELOPING SUPPLYPARTNERSHIPS

SAB companies understand that the

best way to reduce

purchase costs and

increase

quality is to

work in long-

term

partnerships

with

suppliers, for

example, by

sharing technology.

Where possible, our approach is to

source purchases locally, when quality

and reliability can be assured at

economic rates, and to work to

develop local suppliers so that they can

meet our needs. The current

proportions of local sourcing vary

greatly, but are typically around three

quarters in each country.

In Poland, this year saw joint

discussions with Kompania

Piwowarska’s (KP) key malt supplier –

Soufflet – on quality issues, capacity

planning and demand management.

Looking ahead, KP plans to install

on-line computer-to-computer

communication with bottle and can

suppliers.

For Botswana Breweries’ sorghum

beer production, the necessary

packing machines are provided by the

carton suppliers and remain their

property, with appropriate training for

SAB’s operatives. Similarly, the main

truck supplier provides training

on vehicle

maintenance

to the in-

house

team.

In some

countries,

such partnerships are

still largely under-developed, due to

the limited number of local suppliers of

strategic raw materials. Nile Breweries

in Uganda, for example, is starting a

supplier partnering programme with

Kioo Glass in Tanzania, together with

fellow SAB group company, Tanzania

Breweries. Over the last three years,

Nile Breweries has successfully

developed local capacity for label

production, offering technical advice.

A local supplier of crown corks has

also received technical support

and input.


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20

Gary Bull, Director CommercialServices: Europe in the SABI Europecentral procurement offices, based inPrague

However, the trend in business is to

source more supplies at regional hub

level, with larger contracts offering

better prices, quality and consistency.

Previously, our preference for ‘local’

purchases essentially meant looking at

the national economy. Now we are

reviewing the approach to ensure that

we achieve our corporate citizenship

goals, taking into account the wider

economy at regional level.

As the day-to-day boundaries between

a company and its supply partners

become blurred, it is even more

important to share a common

approach to business behaviour. Last

year the corporate accountability

review sought any instances of a

‘values clash’ with major suppliers.

None were reported, and we noted

that the absence of major disagreement

was a good starting point. This year,

the review asked for evidence that

values were being taken into account

during contract negotiations. SAB

companies in Kenya, Uganda and

South Africa now include these issues

when drawing up formal contracts.

SUPPORTINGENTREPRENEURS

SAB group companies around the

world offer practical help and support

to new entrepreneurs wishing to set up

their own businesses. Within South

Africa, this effort to develop an

entrepreneurial culture has a special

focus on ‘commercial equity’ – using

the purchasing power of the supply

chain to develop black-owned

businesses.

Currently Beer South Africa has more

than 5,000 commercial equity

companies registered on its vendor list,

many of them new businesses

supported by outsourced services

such as distribution. Over the last five

years, the total amount spent on

commercial equity has trebled to reach

R532 million (US$73), but the rate of

growth is now slowing.

As a result, a new strategy is being

implemented to help develop major

black businesses over the next two or

three years, so that they will be in a

position to secure some of these

0

100

200

300

400

500

600

200120001999199819971996

Rm

BLACK SUPPLIER PURCHASES:BEER SOUTH AFRICA

Financial year (ended 31 March)


21

MOSI refrigeratedcontainers:Zambian Breweries is helping

some of its current employees

to set up their own businesses,

as part of a drive to extend

sales in rural areas.

Refrigerated containers are

being refurbished and placed

on a company-purchased plot

of land. Each one has the

capacity for 250 cases, with a

small office and secure drop-in

safe for takings.

Container controllers are

recruited from existing

employees and trained in

stock control and financial

management. Once sales have

grown to an average 1,500

cases a month, the individual

is offered a contract as an

independent distributor and

paid a rate for each case sold,

from which operating

expenses must be met. Eight

of the eleven containers

placed during the year were

successfully transferred and

sales are averaging 3,000

cases a month.

Watson Kaira, project manager of theZambian Breweries refrigerated containerproject

Kompania Piwowarska, Lech Brewery, inPoznan

Beer South AfricaEnterpriseDevelopmentCentre:In December 2000, SAB set

up a new centre to spear-

head its growing efforts to

promote enterprise and

develop business opportu-

nities focused on disadvan-

taged communities. This

builds on nearly a decade of

support and includes:

● Kick-Start, a competition

for young entrepreneurs

– over 20,000 partici-

pants have received

training and more than

2,000 have set up in

business.

● Project Noah,

originally a partnership

with the Food and

Allied Workers’ Union,

to help SAB

employees facing

retrenchment find new

jobs, the project

increasingly offers

business development

advice; last year 150

former employees started

businesses with its

support.

● Isando Incubator,

offering workspace,

advice and a supportive

environment to fledgling

enterprises – previously

for SAB retrenchees, it is

now open to anyone with

a good business idea; so

far it has helped create

180 jobs.

contracts in the future. Meanwhile, a

special effort is being launched to

identify procurement areas which can

be outsourced to existing black

businesses almost immediately.

GOVERNMENTS

Governments and their various

regulatory agencies are key

stakeholders in our business – given

their propensity to levy high taxes on

alcohol and gaming, and their power to

grant or withhold licences. SAB

companies engage with political

authorities through open and arm’s

length relationships, so as to protect

their commercial interests. They did not

make political donations or otherwise

involve themselves in party political

activities during the year under review.

This year’s review asked group

companies to report any prosecutions

as a result of breaches in legislation

relevant to corporate accountability.

Only one company reported an issue,

namely Romania, where a long-

standing dispute about the timing,

categorisation and applicability of

contracted investment following


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22Alec Erwin (right), South African Minister of Trade and Industry with Norman Adami, Chairman of the South African Breweries Ltd, at the opening of the new Eastern Cape Ibhayi Brewery

Coke deliveries to small consumer outlets in South Africa, creates entrepreneurial opportunities

privatisation has

been put into

arbitration. The

government is

seeking fines of some US$2.5

million.

In addition, with regard to disputes,

Lesotho, Malawi, Botswana and

Poland report ongoing discussions

about tax assessments.

LOCALECONOMIC

DEVELOPMENT

During the year under review, SAB

group companies contributed

US$1.1 billion in public revenues,

mainly excise duties, sales taxes

and import duties, but also

corporation tax and employee

payroll contributions (the amount of

US$855 million reported in the cash

value added statement, reflects

corporate and excise tax only). In

some countries, SAB is the biggest


23

Local economicimpact:“Kompania Piwowarska (KP),

SAB’s Polish subsidiary, holds

around 30% of market share,

selling more than seven million

hectolitres in 2001. Tyskie is

the most important brand in

the portfolio. The workforce

is 2,500, which means

that together with

dependants some 7,000

directly rely on KP for

their livelihoods.

The wage bill is US$25

million, of which some

US$5.5 million is paid in

taxes to the national

exchequer.

An estimated 50,000

jobs are sustained in

distribution companies

and retail outlets, with

more in raw material suppliers

and bought-in services such as

advertising. Sales of Tyskie and

our other brands account for

about 2% of turnover in all

Polish retail outlets, while

advertising by the whole beer

sector contributes around

5 – 7% of TV revenues.

A study by CASE-Doradcy

estimates that 56% of Polish

beer industry revenue is paid in

VAT, income tax, excise duties

and other taxes. Across this

tax spread, KP contributes

over US$250 million each year,

equivalent to a third of the

country’s national health

budget or more than is spent

on culture, national heritage

protection, physical fitness and

sport.”

Extract from Social

Responsibility Report, prepared

by Kompania Piwowarska,

Poznan 2001. Available at

www.browarytyskie.pl

Excise/sales/import duties 76%

Company tax 16%

Employee related taxes 8%

TAXES BY TYPE

single collector and payer of tax,

and our continued commercial

success underpins many vital public

services. To put this in context, the

total amount paid by SAB is enough

to provide life-long clean water to an

extra 65 million people each year,

according to estimates by WaterAid,

the international development

agency.

Our contribution to local economies

extends far beyond tax payments. In

addition to the 40,300 existing jobs

created by group companies and

associates covered in this review,

we support an additional 8,750 in

directly outsourced services,

including 1,800 owner-drivers and

crew.

As part of the accountability review,

group companies also considered

the wider employment impact in the

value chain, downwards through

supply contracts and upwards to

distributors, wholesalers and

retailers. These estimates vary,

depending on the country and

sourcing methods. Compañia

Cervecera de Canarias used

Spanish Brewers’ Association

estimates of 20 indirect jobs for

each direct employment; Kompania

Piwowarska used Polish national

accounts to indicate a similar

multiplier impact. If these estimates

are correct, then more than three

quarters of a million people around

the world may depend in large

measure on SAB companies for

their livelihoods, with many more

benefiting among their families and

dependants.

RETRENCHMENT

Sometimes, it is necessary to

reduce our own direct employment.

During the year, out of a total

workforce of 40,300 including

China, a total of 2,359 employees

were retrenched in SAB companies

around the world, slightly down on

last year. Of these, 1,721 were

enforced redundancies, with the

balance either taken voluntarily (533)

or outsourced (105) with the jobs

preserved.

Of the 11 SAB companies reporting

reductions in their workforce

through retrenchment, nine also

reported active programmes to help

those affected find alternative

employment. Examples include

training in new skills and advice on

starting up in business. While such

retrenchment is always regrettable, it

is essential to maintaining business

competitiveness and ultimately

preserves many more jobs in the

company.


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24

Enforced 73%

Voluntary 23%

Outsourced 4%

RETRENCHMENTBY REASON


25

What you think matters

Through the day-to-day operation of the business, SAB is in regular

two-way communication with its key stakeholders on many of its

economic impacts, positive and negative. This includes:

● customers and consumers – regular and detailed attitude surveys

● employees – about developments in the business, directly and

through trade unions

● governments – economic development plans and regulatory

policies

● investors – through open governance arrangements

● major business partners – on performance and growth plans

As we strive to be a good corporate citizen, we value

feedback from all sources and will try to act upon it.

Please let us have your comments to:

[email protected], or Fax:+27 11 339 2389

Web site references:European Foundation for QualityManagement www.efqm.org

International Standards Organisation www.iso.ch

Spanish Brewers Association www.cerveceros.es.com

Water Aid www.wateraid.org.uk


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52

Performance measures are reported in accordance

with Triple Bottom Line methodology, and, as

such, data are broadly grouped in economic,

social and environmental categories.

BASTION GRAPHICS

This report is printed on environmentally friendly, chlorine-free paper

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50

EXECUTIVE DIRECTORS

E A G Mackay (Chief Executive)#

N J Adami (Chairman and Chief Executive,SAB Limited)#

R L Lloyd (Organisation Development Director)

M H Simms (Managing Director – SAB InternationalEurope)

M I Wyman (Chief Financial Officer)#

*Audit Committee †Nomination Committee ‡Remuneration Committee

#Corporate Accountability and Risk Assurance Committee

NON-EXECUTIVE DIRECTORS

J M Kahn (Chairman)†‡#

H R Collum*†‡

Lord Fellowes*#

M J Levett*

P J Manser*

M Q Morland*†‡

M C Ramaphosa#

Lord Renwick of Clifton†‡

H R Slack*

Dr C B Strauss*

COMPANY SECRETARY

A O C Tonkinson

REGISTERED OFFICE

Dukes Court, Duke Street, Woking, Surrey, GU215BH England

HEAD OFFICE

One Stanhope Gate, London W1K 1AF

Telephone +44 (0) 20 7659 0100Telefax +44 (0) 20 7659 0111

South African Breweries plcRegistration number 3528416

South African Breweries Annual Report 2001

51

Your comments on this Review should be faxed, mailed or e-mailed to:

Alison Ramsden

Group Corporate Accountability Manager

South African Breweries plc

OFFICES AT

2 Jan Smuts Avenue

Braamfontein

South Africa

2017

POSTAL ADDRESS

PO Box 1099

Johannesburg

South Africa

2000

Telephone +27 11 407 1716

Telefax +27 11 339 2389

E-mail [email protected]

This Corporate Citizenship Review is available on the Internet at http://www.sabplc.com

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38

Environmental

“Our industry is recognised as having relatively a

low environmental impact. Nevertheless, we have

taken it upon ourselves to manage our aspects and

our impacts in the best practical manner, given the

challenges that accompany our emerging market

operations.” Andrew Tonkinson Company Secretary

Environmental Policy

SAB plc embraces the obligations of corporate citizenship towards the environments in which it operates and the dutiesof care owed to present and future co-citizens.

Accordingly, SAB plc will seek to conduct its activities wherever located with complete commitment to international bestenvironmental practice, not least by conforming to applicable jurisdictional regulation on the environment, health andsafety.

In order to further this policy, SAB plc will:

● align its risk management and control practices to take account of local conditions, while setting minimum standardsand improvement targets;

● continuously monitor the impact of the movement and use of materials, energy, facilities and other resources in itsoperations on communities and the environment;

● implement natural resource conservation programmes, particularly of water usage in its brewing operations;

● promote recycling initiatives in its businesses and the community, particularly of used packaging materials;

● adapt and implement technologies to limit and reprocess effluents, emissions and waste, including refrigerants, and torehabilitate resources as required;

● locate new facilities within the parameters of environmental impact assessments;

● communicate openly with stakeholders regarding environmental planning and material impact of related activity;

● as a longer-term goal, develop environmental management systems in its various operations in conformity with theInternational Standards Organisation (ISO) 14 000 and ultimately to have these audited by an internationallyrecognised authority; and

● contribute financially to selected organisations promoting aspects of environmental awareness and protection.

Environmental impact is one of the three elements of ‘sustainability’ –

the goal to ensure we can meet the needs of today without cost to

future generations. Previously in SAB, we have placed a greater

emphasis on the other two aspects – economic and social impacts.

They were seen as the priority in the emerging markets where we

mainly operate. In addition, our core activities in beverages, hotels and

gaming were generally accepted as having low environmental impacts.

Our increasing focus on the environment is not simply a response to

growing public concern. It is a recognition of the importance of

maintaining the supply and quality of the natural ingredients – barley,

hops, sugar, fruits and above all, water – that make up the production

of beer and soft drinks.

Much of the business community, along with governments and

individual citizens, now understand better the dangers associated with

global warming, especially so-called ‘greenhouse gases’, such as

carbon dioxide. In some parts of the world, supplies of clean water are

rapidly diminishing: this vital commodity for sustained human life is at

risk. Concern is also mounting in some societies about the detrimental

effects of waste and pollution, especially of consumer packaging.

At the same time, companies such as SAB are discovering that

investment to achieve environmental improvements also makes

prudent financial sense, with realistic payback periods.

That is why last year we announced our intention to institute a

groupwide environmental monitoring system. This has been largely

achieved, and for the first time we are able to report impact data. In

subsequent years, we will be able to show trend data

and we plan to broaden the scope of

issues addressed.

ENVIRONMENTALMANAGEMENT SYSTEMS

Nine major SAB breweries meet best international standards with

ISO 14001 certification, covering just over half of worldwide

production. Three more expect to achieve certification in the current

year and at least two more plan to do so the following year. All major

sites without ISO certification are assessed against internal SAB

standards, related to policies, targets, staff training and emergency

planning. Since our primary listing in London, we have joined the

Environmental impact – at a glance

● first ever groupwide environmental monitoringsystem established

● number of sites with ISO 14001 certification up

● work begun on quantifying carbon dioxide output(in accordance with the UK Department of theEnvironment, Transport and the Regions’guidelines)

● impact of clear beer production down – water downto 6.0 hl/hl; electricity down to 10.2 kWh/hl, andeffluent output down to 4.1 hl/hl (group average)

● only three accidental spills reported

Our environmental business

principles – in brief

SAB supports the goal of sustainable development –to ensure that our actions meet the needs of thepresent, while minimising the cost to futuregenerations

● working towards international best environmentalpractice, with targets for progressive improvement

● minimising the impact of materials, energy, facilitiesand other resources used, especially by conservingnatural resources, notably water

● using technologies to reduce and reprocesseffluents, emissions and wastes, includingrefrigerants

● promoting reuse and recycling initiatives both inbusiness operations and in communities,particularly of used packaging materials

SAB’s corporate accountability framework is based on a

comprehensive set of 26 detailed Business Principles,

covering economic, social and environmental impacts.

(See www.sabplc.com)

Business in the Environment Index, and

our environmental management

systems (EMS) can be benchmarked

and progress tracked more effectively.

As a minimum, all SAB operations are

required to meet legal and regulatory

standards. During the year under

review, Nile Breweries in Uganda

contravened the national statute

governing waste water discharges.

Ugandan industry believes the

requirements of the statute to be

unachievable and are currently

negotiating with government to achieve

a more pragmatic approach.

REDUCING WATERCONSUMPTION

Both beverage production and hotels

depend on a reliable supply of water fit

for human consumption. Long-term

global trends show declining supplies

per capita and in some parts of the

world less than half the population has

safe, clean water. In brewing, water use

is essentially split in two main areas:

● production of beer (between 20 –

30% of total consumption); and

● auxiliary operations such as cleaning,

cooling and steam generation.

The amount actually consumed is

dependent on factors such as the age

and condition of the plant, packaging

processes, type of equipment

employed and the climate in the

country of operation.

SAB companies are working to

increase efficient use of water, by

changing operational processes,

training staff and investing in new

equipment and facilities. Significant

savings can be achieved by capturing

and reusing water progressively for

lower grade uses throughout the

production process, such as floor

cleaning and initial plant rinsing.

During the year under review, we

achieved an overall water consumption

rate for clear beer of 6.0 hl/hl, a good

performance by industry standards and

an improvement on last year. This figure

excludes our operations in China,

E N V I R O N M E N T A L continued

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0

2

4

6

8

10

12

Effluent(hl/hl)

Electricity(kWh/hl)

Water(hl/hl)

GROUPWIDE AVERAGE WATER ANDELECTRICITY USAGE, EFFLUENTPER h/l CLEAR BEER PRODUCED

Average

0

2

4

6

8

10

12

BeerSA

SABIEurope

SABIAfrica

hl/hl

CLEAR BEER WATER CONSUMPTION

Average

Municipal water 73.5%

Ground water 19.7%

River water 6.8%

WATER SOURCESGROUPWIDE AVERAGE

Business in the Environment Index

For the last five years, the UK-based organisation, Business in theEnvironment, has produced an Index of Corporate EnvironmentalEngagement, focusing on the activities of major companies listed on theLondon Stock Exchange. Following the listing, SAB decided to take partand the first results were published early in 2001. The index coversenvironmental management systems, communication and some genericperformance measures.

Overall we were ranked 139 out of 184 participants. Placed 17 in the non-cyclical sector, we scored 40% against a sector average of 67.8%. Ourstated commitments to improve SAB’s environmental performance shouldresult in a better score in subsequent years.

where accurate data to date have been

unavailable. Water usage is now an

issue of core focus for CRE Beverage,

due in part, to the drought situation in

the country.

Individual consumption rates vary

around the world, depending on the

level of capital investment, size and full

utilisation of capacity. Our best

performing brewery remains Alrode in

South Africa. It is also our biggest

single brewery in terms of volume.

Having cut its water ratio from 4.4 last

year to achieve 4.19 this year, a new

target of 4.0 has been set. Plans

include recovering bottle rinse water for

use in the floor wash recycle system,

together with a further waste water

treatment plant.

SAB companies around the world are

taking action to decrease water use.

Tanzania Breweries has cut

consumption by 29% over the last two

years through new controls on the

packaging line. Dreher Sörgyárak in

Hungary invested US$100,000 in a

scheme to reuse drain water for air

compressor cooling. The capital ‘pay-

back’ period is estimated at three years.

Sorghum beer production requires

lower levels of water – between 2 and

3 hl/hl – and less energy. SAB’s soft

drinks operations monitor water

consumption and are achieving creditable

average rates by international standards

of 5 hl/hl beverage produced.

In Southern Sun, monthly monitoring

of usage rates has been introduced

and simple techniques put into practice,


41

Water quality in

China:

In China, the majority of

brewing water is derived from

wells. The quality is at risk due

to pollution and the declining

water table. SAB has worked

over the last three years with

its Chinese partner to:

● develop a company water

standard which meets

international levels;

● adopt a consistent

technology which meets

these standards;

● select two local suppliers to

assist in upgrading

technology; and

● upgrade water treatment

plants at four breweries, at a

cost of US$4.1 million –

meeting the above

standards and successfully

adopting the new

technology.

Over time, the remaining

breweries and new

acquisitions will adopt this

approach.

The focus

on water

quality is

expected

to give a

competitive

advantage

over other

Chinese

brewers.

International benchmarks

(Clear beer production)

SAB group UNEP

(2000/1) (1999)

Water consumption 6.0 hl/hl 5 – 6 hl/hl

Electricity usage 10.2 kWh/hl 8 – 12 kWh/hl

Effluent discharge 4.1 hl/hl 3.5 hl/hl

Source: United Nations Environmental Programme (UNEP) Technical Report Series, No. 33 Environmental Management in the Brewing Industry.

Effluent plant at Dalian Brewery in China

such as double flush system for toilets

and using waste water for irrigation in

hotel gardens. During the year under

review, Southern Sun’s total water

usage in South Africa amounted to

1.6 billion litres. That provides a

benchmark of some 173,000 litres per

room per annum as a target on which

to base improved performance in

future years.

CONTROLLING ENERGY

CONSUMPTION

Inefficient use of energy is not just

expensive; it causes unnecessary

atmospheric emissions, notably carbon

dioxide. This year we have measured

our electricity consumption around the

world, and have made good progress

in assessing use of primary fuels such

as coal, oil and gas.

The main consumers of electricity in

brewing operations are electric motors,

CO2 recovery plants, effluent treatment

plants, refrigeration, compressed air

plants, the packaging line and office

functions. Overall SAB breweries used

10.2 kWh per hectolitre of beer

produced, good by international

standards. In comparison to last year,

breweries in Africa and Europe reduced

consumption (based on comparable

data), while the trend in South Africa

was up – partly due to the introduction

of an electrode boiler at one of our sites.

Southern Sun has calculated

electricity consumption for its South

African hotels, and calculated a daily

benchmark cost of R11.83 (US$1.60)

per room sold. Research is under way

to find the best way to introduce power

management systems and so cut

consumption and costs, working with

outsourced facilities management.

Monthly monitoring has started and

interim targets set, focused on hotels

currently consuming above the

Southern Sun group average.

We have also started work on

monitoring vehicle fuel consumption

around the world, where the main

impact is the transport of products to

market. In most countries this is now

very largely outsourced to independent

contractors, as a way to control costs

and encourage independent

entrepreneurs. Outsourcing has

complicated the monitoring process.

More efficient routing and scheduling

systems can achieve significant

reductions. During the year, ABI

introduced its enhanced Roadshow

planning and reduced kilometres

travelled and hence fuel usage. This

cut diesel costs by 23.6% and petrol

by 13.0%. Overall delivery fuel usage is

now benchmarked at 5.52 l/hl delivered.

Reducing and reusing

effluents

As we have progressively reduced

water consumption, so the volumes

of liquid effluent in brewing have fallen

– between 60 – 70% of total water

intake typically ends up as waste

water. The main components are


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0

3

6

9

12

15

BeerSA

SABIEurope

SABIAfrica

kWh/hl

CLEER BEER ELECTRICITY USECLEAR BEER ELECTRICITY USE

Average

CLEAR BEER EFFLUENT OUTPUT

0

1

2

3

4

5

6

BeerSA

SABIEurope

SABIAfrica

hl/hl

Average

Municipal treatment 93.35%

Discharged to river 6.65%

EFFLUENT DISCHARGEGROUPWIDE AVERAGE

organic substances skimmed from

the brewing process – notably, spent

grain and surplus yeast which are

almost universally reused as food

ingredients and animal feed. Lesser

components include effluent from the

packaging line, such as labels, and

some chemicals – namely caustic,

acids and detergents used for “cleaning

in place”, bottle washers etc.

During the year, SAB Breweries

achieved an overall effluent ratio of

4.1 hl/hl, an improved performance

on the previous year. Although this

figure excludes our operations in

China, where volumes were not

comprehensively measured, all sites

have effluent treatment plants in

compliance with local regulations. The

best performance was at Prospecton

in South Africa, achieving 2.0 hl/hl,

with Radegast in the Czech Republic

a close runner-up at 3.0hl/hl.

Effluent is primarily discharged to

municipalities/local authorities, where

waste water is treated to local

specification. Several breweries also

have primary waste water treatment

facilities on site, where effluent

undergoes initial treatment to

neutralise it and reduce organic

loading. Some breweries are now

using anaerobic treatment plants to

convert waste into methane gas.


43

Anaerobic

treatment at

Radegast, Czech

Republic:

SAB’s Czech subsidiary,Pivovar Radegast a.s.Nosovice (PRN), convertsbrewery waste into methane,dramatically reducing thevolume of effluent and creatingenergy which is used in theboiler house. The overalloperating costs are half that ofthe 500,000 cubic metres ofgas saved at commercial rates.PRN decided to install ananaerobic pre-treatment plantfor effluent in 1995, using anUpflow Anaerobic Sludge Bed-type reactor first developed inthe Netherlands during theearly 1980s, because of itsefficiency (around 94%) inconverting effluent into energy.The remaining waste sludge istreated in the municipal works,with much reduced levels ofbiological oxygen demand.

Anaerobic treatment in Radegast(beer production 2.1 mil. hl/year + malt house – 24,000 t/year)

HCI NaOH

Buffer tank

Post-aerationtankTo municipal

works

Sludge blanket

Boiler housefor brewery

Flare Gas buffer

UASB reactorBiogas

Natural gas

Staticscreen

CONTROLLING CARBON

DIOXIDE

Carbon dioxide in the brewing industry

arises from two main sources – the

fermentation process itself and auxiliary

operations such as heat generation –

with the latter the most significant

when fossil fuels are used. Additional

quantities are generated in producing

and transporting raw materials, and

then in distributing products to market.

Some CO2 is also released when beer

is consumed, but this is more than

offset by the CO2 captured in the

barley, hops and other natural crops

through photosynthesis during growth.

Through fermentation, sugars in the

wort are converted by yeast into

alcohol and CO2. As a rough average,

this process generates around three to

four kilograms of CO2 per hectolitre of

wort. Such carbon dioxide can be

recovered, purified, compressed and

either reused in the production process

or sold as excess. This is now routine

in SAB breweries across Africa, while in

Europe, where CO2 recovery systems

are not in place, the situation is

currently being reviewed.

For example, at Kgalagadi Breweries

in Botswana carbon dioxide is collected

and recycled for use in the production


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Southern Sun:Hotels managed by

Southern Sun generally

have recycling programmes

for glass and some plastic

containers, with additional

action initiated on an

informal basis by hotel

managers. In order to

quantify the impact and

improve performance, an

initial trial of five Sandton

hotels is nearing

completion. A proposed

system for recycling will

then be presented to the

Southern Sun

Environmental Committee,

with implementation to

other regions thereafter. This

is likely to focus on two

main objectives, which were

set out in Southern Sun’s

first Corporate Citizenship

Report, namely:

● extending the current

head office paper

recycling initiatives, which

have run since 1995, to

all hotels;

● extending recycling in

hotels to include

cardboard, plastics, tin,

aluminium cans

and glass.Recycling paper and plastic at Alrode Brewery, South Africa

process. During the year, the recovery

plant was upgraded to collect more

CO2 and reduce venting to atmosphere.

The upgrade cost was US$240,000

and the target is to achieve savings of

US$65,000 annually on imported CO2.

Meanwhile Castle Brewing in Kenya

installed a new recovery plant, which

became operational in August 2000.

This recovered 275 tons of CO2 during

the year which saved US$103,200.

The target for the current year is

705 tons, based on 3 kg/hl recycled,

rising to 3.75 kg/hl the year after.

The greatest volume of CO2 is emitted

from burning fossil fuels, typically in on-

site boilers, with lesser amounts

generated elsewhere through bought-in

electricity. The

introduction of electrode

boilers – as previously

mentioned – while

increasing electricity

consumption, helps

reduce on-site CO2

emissions.The volume of

on-site CO2 produced

depends on factors such

as the type and quality of

fuel used (with coal worst

and gas best), the

efficiency of boilers and any heat

recovery undertaken. As a rough

average, auxiliary operations can

generate 16 kilograms

of CO2 per hectolitre of

beer produced.


45

Waste minimisation in the Czech RepublicPilsner Urquell, Pivovar Radegast a.s. Nos ovice, Pivovar Velké Povice.

(tonnes per annum) PU PRN VPK

Total waste generated 108,334 32,341 19,703

Feeding and second-use wastes sold 103,561 31,335 18,867

of which recycled 2,976 637 590

Remainder to landfill 4,773 (4.4%) 1,006 (3.1%) 836 (4.2%)

Landfill is kept to a minimum through continuous separation of valuablewastes such as glass, paper and foil. In PU and PRN, detailedwaste disposal guidelines have been prepared as part of theenvironmental management system and used as controldocuments in waste management. In VPK, the documentation isbeing prepared with the introduction of the EMS in compliancewith ISO 14001.

Outsourced contractor removing cullet fromKgalagadi Brewery in Botswana for recycling

Recycling waste

In beverage production, the main

sources of solid waste include cullet

(broken glass), boiler ash and

secondary packaging such as

cardboard, scrap metal and wood.

Already substantial volumes from SAB

breweries are being reused or recycled.

SAB’s newest brewery, Ibhayi, near

Port Elizabeth in South Africa, which

opened early in 2001 with a capacity of

2.3 million hectolitres, was designed

from the outset to achieve the goal of

zero waste – the total reuse or

recycling of all by-products and

wastes.

INDUSTRY RECYCLING

SCHEMES

Much of SAB’s beer production is

supplied in reusable containers, such

as kegs and returnable bottles. Indeed,

in some countries virtually all sales

volume is in this form – for Pivovar

Saris in Slovakia the figure is 99.5%.

For others, the market demands other

types of packaging. Here the materials,

such as disposable glass bottles and


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SC Ursus – Littercampaign:SC Ursus in Romania ran aprogramme at the Black Seacoast during the summer of2000 to educate localpeople and tourists aboutrespect for the environmentand the need to keepbeaches litter free. CostingUS$10,000, the schemeincluded beer bottle re-cycling facilities and wasrun in partnership with CIER(Central Information forEducation andRecreation of theBlack Sea).

SC Ursus is also amember of anindustry initiative onsolid wastemanagement, incooperation with theEnvironmentMinistry. This beganin February 2001and other membersinclude Coca-Cola,Colgate Palmolive,Procter & Gamble,Tetrapack andUnilever.

Zambian Breweries – reuse and recycling:Zambia Breweries estimates that more than half its materials are eitherreused or recycled. Plastic crates are recycled and outer crown cartons andpallets are returned to the supplier for reuse. Plastic bags are donated topeople with a handicap for re-work. Scrap metal is sold for recycling.

Zambia Breweries participates in a number of industry schemes, includingthe National Waste Management Strategy, the Environmental SupportProgramme and the Cleaner Production Initiative.

Ursus Brewery: Cluj – Napoca

produce lighter packaging and more

efficient routing reduces transport

costs and CO2 emissions.

Although less of a threat to global

warming, nitrogen oxide and sulphur

dioxide are pollutants and we have

begun to collate data centrally, so as to

be in a position to report trends in our

performance in future years.

CFCs contained in some refrigeration

units have been identified as a threat to

ozone layer depletion. We have started

to monitor local procedures to dispose

of redundant refrigeration equipment,

where specialist contractors are usually

engaged.

cans, are easy to recycle, given

adequate facilities, or are biodegradable,

in the case of sorghum beer cartons.

Most SAB companies, including the

soft drink operations, are engaged in

promoting recycling schemes and

raising public awareness through

education, sometimes working with

industry partners. The accountability

review identified that only Russia in

Europe, Tanzania, Mozambique and

Ghana in Africa, and China are not

active in some way. However, the trend

in the industry is towards more

disposable packaging and the scale of

recycling activity is limited. Steps to


47

What you think mattersSAB companies are in regularcontact with local stakeholdersabout their environmentalimpacts. As we extend ourgroupwide approach toenvironmental management, we are seeking to engage with a broad range ofstakeholders.

We particularly welcome yourviews on the priorities within the list of our environmentalimpacts and how to strike abalance between social,economic and environmentalissues. Please let us have your comments to:[email protected], or fax+27 11 339-2389

co2 RECYCLED FOR REUSE

PRODUCT OUTPUT AND CONSUMPTIONPREPARATION AND PRODUCTIONRAW MATERIAL INTAKE

REDUCE REUSE

FOOD PRODUCTS

LIVESTOCK FEED

RECYCLE AND RESPONSIBLEWASTE DISPOSAL


Business in the Environment www.business-in-the-environment.org.uk

International Standards Organisation www.iso.ch

National Occupational Safety Association www. nosa.co.za


Optimising resource consumption

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LENGTH OF SERVICEOVERALL AVERAGE WITH FIVE YEARS PLUS

Groupwide average for 2001 at 58.6%(57.4% in 2000)

2000 2001

0

10

20

30

40

50

60

70

SouthernSun

SoftDrinks

BeerSA

SABIEurope

SABIAfrica

%

At the heart of SAB’s approach to

corporate social responsibility is the

recognition that running a business is

not just an economic activity of interest

to those who gain financially.

Certainly, our principal purpose is to

create wealth by turning natural

resources, human ingenuity and financial

capital into products and services, which

succeed in the market place.

However, SAB has long understood

this activity has both positive and

negative impacts on society far beyond

those immediately involved – and it has

always sought to manage the business

accordingly, whether that be minimising

environmental impacts or engaging

local communities.

We believe this should hold true for

every public company anywhere in the

world. However, the reality for us is that

we operate mainly in emerging

markets. Here, especially, business is

expected to play a pivotal role not only

in building prosperity, but also in

shaping social development and in

upholding high standards.

The way we treat employees, the fact

we always resist paying bribes, the

care we take when promoting our

alcoholic beverages and gaming

activities, the involvement we have in

local communities – all these set an

example of corporate behaviour and

add to the quality of life in the societies

where we conduct our business.

Social

“SAB is changing and growing rapidly. As such, we

are striving to strengthen our sense of corporate

culture and our ability to work for the greater good,

both as an employer and in our relations with society

at large” Pete Lloyd Organisation Development Director

EMPLOYEES

SAB companies seek to offer their employees pay and benefits, which

are fair when related to the skills and performance of the individual,

and to prevailing conditions in the industry and country as a whole.

Furthermore, working conditions must be safe, and individuals allowed

the opportunity to develop to their full potential.

One indicator of employee satisfaction with our performance is length

of service. Over half our staff have stayed with the group for five or

more years – currently 58%, slightly up on the previous year.

However, labour turnover as a whole has started to increase; one in

seven employees left the group last year, up from one in eleven during

the previous year. Operations in Poland, Hungary, and the Czech

Republic, together with Beer South Africa, ABI and Southern Sun

were most affected. A major part of turnover is retrenchment –

discussed above; of some 4,000 individuals who left, nearly 60% are

accounted for by retrenchment of posts. The total number of

redundancies was down slightly on the previous year. Nonetheless,

the rising level of labour turnover is a concern and will be carefully

monitored.

Our social business principles – in briefEmployees

● fair remuneration, according to skills and performance andrelated to competitive industry and country conditions

● continuous improvement in health and safety performance

● an environment in which all individuals and teams candevelop their full potential

● respect for the wide range of human diversity andencouragement of inclusiveness

● honest and respectful communication, freedom ofexpression, right to free association of employees andcollective bargaining

● encouraging employees to be creative, innovative andopen to new ideas

● integrity in business conduct – not engaging in, ortolerating, any corrupt practice

Products and services

● promoting products and services in an honest manner,respecting the values of our consumers’ societies

● engaging with issues of concern in society and, throughconsumer education, seeking to avoid the misuse of our

products and services

Community engagement andconsultation

● partnerships which bring measurablebenefits to people in local communities;particular support for organisations whichstrengthen and develop civil societies

● regularly consult people affected byoperations, both formally and informally,especially on social issues andenvironmental impacts, giving due weightto their views

SAB’s corporate accountability framework is based on acomprehensive set of 26 detailed Business Principles,covering economic, social and environmental impacts (seewww.sabplc.com).

Social impact – at a glance● investment in training up – five days on average for every

employee worldwide

● long service steady – more than half employees stay fiveyears or more – but labour turnover rising – one in sevenleft during the year

● groupwide monitoring system established for women inmanagement – currently one in four

● record commercial equity spending in South Africa, butroom for improvement on employment equity across ourSouth African operations

● new partnership for global alcohol charter endorsed

● action programmes for HIV/AIDS in place for all Africancountries

● corporate social investment spend of US$9 million – at 1.4% of pre-tax profits, slightly down on last year

DISABLING INJURY FREQUENCY RATEPER 200,000 HOURS WORKED

0

0.5

1

1.5

2

2.5

3

3.5

4

SouthernSun

SoftDrinks

BeerSA

SABIEurope

SABIAfrica

A

PAY, PENSIONS AND

HEALTHCARE

SAB companies seek to offer

employees a total remuneration

package that is fair, having regard to

market conditions. In some countries,

this is significantly better than the

comparable local average, taking

into account healthcare

benefits and retirement

provision. This year’s

accountability review

ascertained that all

SAB companies

now offer

access to

primary

healthcare,

going

beyond

occupational

injuries and often

including dependants.

All company employees

have access to either

state or company pension

schemes.

The accountability

review examined pay rates

in each SAB operation, looking

at differentials and averages

among lower paid grades. All are

believed to exceed national legal

minima, where applicable. Next

year, the review will focus on

how local living costs compare

with our rates among the lowest

paid grades.

HEALTH AND SAFETY

SAB’s responsibility as a good

employer goes beyond remuneration to

ensure a safe working environment.

Many SAB companies use the NOSA

occupational health and safety

standard. All sites in our South African

companies are fully NOSA accredited,

along with four in SABI Africa and two

in Europe.

As pledged last year, we have

instituted a standard groupwide

assessment of accident rates, using

the externally recognised DIFR

measure (disabling injury frequency

rate). Monitored site by site, this will

focus attention on poor performers and

so drive down accident rates to the

lowest practical level. This year’s

groupwide average is 1.7, higher than

we would like; nonetheless, more than

half of SAB companies have rates

below 1.5 – a benchmark figure as the

threshold for achieving NOSA’s 5 Star

standard.

The DIFR for Ghana and Canary

Islands was disappointing and action is

being taken to reduce the accident

rate. Most regrettably, during the year,

in China one employee of our associate

company, CRE Beverage, attempted

to rescue a colleague who had

collapsed in a fermentation tank and

died due to high levels of CO2. In

Poland, two employees of a building

contractor were killed while working on

our Tyskie site, with a further contractor

S O C I A L continued

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Dental clinic for employees atLech Breweries, KompaniaPiwowarska in Poland

fatality in Poznan – due to

inappropriate use of safety equipment.

In SAB, safety for all employees and

contracted workers is an absolute

priority: in a drive to increase safety,

accident rates are now being

monitored centrally throughout all of

our operations and reported to the

board on a half yearly basis.

FOCUSING ON HIV/AIDS

Last year, we said the scale of our

effort to address the HIV/AIDS

pandemic had to be uplifted

dramatically. This was set as a key

target for improvement. All our

operations in Africa recognise AIDS

as both a human tragedy of

unprecedented proportions and a vital

business issue: disease-related deaths

are noticeably increasing staff turnover

rates. All SAB operations have either

already incorporated awareness,

education, prevention and treatment

action into their strategic business

plans, or will do so in the coming year.

In Kenya, for example, all employees

have attended mass awareness

workshops and 13 specially trained as

peer educators. Ten have volunteered

to serve on the HIV/AIDS coordinating

committee and they have upgraded the

staff medical scheme to include

treatment for HIV/AIDS (excluding anti-

retroviral drugs).

In Malawi, Chibuku Products is now

running awareness education sessions

and has introduced the free issue of

condoms at two of the four breweries.

The programme will be extended to the

remaining

breweries and

to taverns

during the

coming year.

In Mozambique,

HIV/AIDS is

now a key focal

area in the

strategic plan.

A ‘knowledge,

attitudes and practices’ survey

was recently conducted and a

communication and awareness

programme implemented in all areas

of the business. Free condoms are

distributed in all their clinics to staff.

A task team and union officials have

been trained, with peer group leaders

now being identified.

TRAINING AND

APPRAISAL

A commitment to offer all employees

the opportunity to develop their

skills can ring hollow if adequate time

is not set aside. On average, all

employees received five days training

during the year under review, up

a quarter on the previous period. This

includes employees on lower-skill

grades. The accountability review

examined the allocation of time

and found hourly-paid staff benefit

equally with managerial and executive

levels.


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TRAINING SPEND AS APERCENTAGE OF PAYROLL

*Excludes China

0

1

2

3

4

5

SouthernSun

SoftDrinks

BeerSA

SABIEurope

SABIAfrica

%

Staff regularly attend training at Beer South Africa’s Training Institute

0

10

20

30

40

50

60

70

80

90

BeerSA

AppletiserABISouthernSun

%

SELECTED DIVERSITY DATA(SOUTH AFRICA ONLY – % BLACK,ASIAN, COLOURED)

*Excluding hourly paid employees

Executive/management Total staff

WOMEN IN MANAGEMENT

Groupwide for 2001 at 23%(24% in 2000)

2000 2001

0

10

20

30

40

50

SouthernSun

SoftDrinks

BeerSA

SABIEurope

SABIAfrica

%

To provide a recognised external

benchmark, the review also

examined training budgets as a

proportion of total payroll costs. This

revealed that 74% of group

companies equalled or bettered the

overall American Society for Training

and Development’s 2001 benchmark

of 1.8%. SAB’s South African

companies all exceed this level, but

there is some evidence that they may

be falling behind the investment

made by other comparable national

companies. For example, a survey by

P-E Corporate Services in 2000

among 750 employers in South

Africa representing 1.5 million

employees found that companies

typically spend 4.3% of payroll on

training, up from 3% in 1997.

DIVERSITY

Last year, we highlighted the different

managerial and executive grading

systems in use across the SAB group

and explained how this caused

difficulties in compiling consistent

data about the participation of

women in senior roles. These have

now been successfully reconciled.

Women account for 23% in

management grades, roughly equal

to the figure for the workforce overall.

This is currently standing at 24%,

down slightly from 25% last year

(excludes China).

Given the nature of our industry and

the disproportionately low levels of

women promoted to senior roles in

business generally, we believe this

performance to be positive.

However, the overall average is

boosted by the strong performance

of Southern Sun and so masks

some poor performing divisions.

Partial data from last year’s

accountability review identified

relatively low levels of participation in

SAB’s workforce by people with a

disability, compared with the general

population. This year’s review

examined whether disability issues

are addressed in strategic business

plans – with disappointing results.

However, Beer South Africa’s

Isando region has taken a lead.

Their newly formed Employment

Equity Consultative Committee (a

requirement of the Employment

Equity Act) highlighted the need for

action to promote and implement

equity for all sections of society.

Thus, two opportunities for workers

with a disability were created,

including a receptionist position at

the regional office. During the year,

evidence of such good practice will

be shared around the group.

In South Africa, companies are

required under the Employment

Equity Act to address imbalances in

the composition of the workforce.


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We continue with our efforts to focus

on this issue and report an average

executive/management percentage

of 15.3 and total staff percentage of

74.6 for this region.

A survey by P-E Corporate Services

in 2000 among 750 employers

in South Africa representing

1.5 million employees found

the percentage of black senior

managers to be 16%, up from 4%

in 1994 but still well below the

proportions in the workforce as

a whole (85%).

HUMAN RIGHTS

SAB companies seek to respect

fundamental human rights; this goes

beyond our core principles of valuing

diversity and encouraging

inclusiveness. We seek to respect

the 1948 UN Universal Declaration of

Human Rights and the various

subsequent International Labour

Organisation (ILO) conventions. For

example, no children under the age

of 16 are employed or otherwise

engaged anywhere in the SAB group.

However, we have not yet codified

this approach into a formal policy.

This is a task for action in the current

year. At present we are confident that

no SAB company uses any form of

forced labour. We have not checked

the incidence among suppliers,

although we are not aware of any. As

regards site security arrangements,

we have yet to establish groupwide

standards and ensure they are

adopted by contractors. At present,

we are not aware of any complaints

about current local arrangements.

EMPLOYEEINVOLVEMENT

SAB companies believe in freedom

of expression and the right of

employees to join trade unions for

collective bargaining purposes. They

try to build a sense of common

purpose through open and honest

communication.

Across SAB, levels of participation in

trade unions are generally on a par

with or higher than equivalent

national rates, according to ILO data.

Currently 55% are members, slightly

down on last year.

Last year, as a result of industrial

action, SAB lost in total 60,000

working days, while during this

reporting period only ABI suffered a

dispute – losing 1,490 working days

as a result.

SAB operating units reported a total

of 383 applications to industrial

tribunals arising from a variety of

grievances by staff about alleged

failures in employment procedures.

Almost a third of these cases were

still outstanding at the year end; of

those that have been concluded,

61% were found in favour of the

company and only 11% against, and

28% were settled before being heard

by a tribunal.


31

0

20

40

60

80

100

ChinaSouthernSun

SoftDrinks

BeerSA

SABIEurope

SABIAfrica

%

UNIONISATION

Groupwide average 55.0%

COUNTERING

BRIBERY

SAB does not tolerate any

form of corrupt practice. Yet in

some markets, this is far from

the national norm and runs

contrary to what some regard

as the customary way of

doing business. It is, therefore,

commendable that, out of

more than 40,000 employees covered

by this review, only 20 staff were

suspected during the year of being

involved in cases of bribery or

corruption (excluding cases of petty

theft).

Group companies either translate into

local languages SAB’s code of conduct

and ethics or draft their own (no less

strong) local code. These are then

disseminated to managers and

employees. Depending on local needs,

briefings are added to induction

procedures for new staff, workshops

held for existing staff and other action

taken.

Last year we reported that two

countries did not take steps to

communicate internally what

procedures and activities are

considered acceptable behaviour; we

pledged to strengthen reporting

procedures. This has now been

achieved and a complete groupwide

approach is in place.

Now our focus is

shifting to


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Cases of

alleged

bribery and

corruption

Instances identified duringthe year, as follows:

Castle Brewing Kenya –two staff involved inseparate instances; courtcases are pending

Kompania Piwowarska –two cases involving foursuspects, although theevidence was not strongenough to sustain aprosecution

Beer South Africa – oneemployee suspected ofsoliciting a payment from amaintenance contract; acriminal investigation isunder way

ABI – ten separateinstances, each involvingone staff member

Appletiser – one case of anemployee receiving a giftfrom a supplier; dismissalresulted

Southern Sun – two minorinstances at hotelsresulting in both staff beingdismissed

Implementing

ethical standards:In Poland, Kompania Piwowarska(KP) has drawn up its own standards,documented in ‘Ethical and PeoplePrinciples’, which is aimed particularly atexecutives and managers. Workshops involving employee representativeshave discussed company values during the year and the SABI EuropeEthics Policy is being rolled out internally. Once adopted, KP will extend it tosuppliers.

In Slovakia, Pivovar Saris drafted a company values statement with thedirect involvement of 60% of the workforce. The standards relating tobribery and corruption are communicated to major suppliers andcustomers. At induction employees are given training concerning:

● code of conduct

● mission, vision and values

● company policies

SAB International – europe

Ethics involves a clear conscious commitment

to do the right thing at all times. It supports

us in our behaviour with our stakeholders as

we apply our values to achieve our Mission.

BUSINESS ETHICS

Guidelines to Employees

BUSINESS ETHICS

Guidelines to Employees

communicate this strong ethical stance

to suppliers, customers and other

stakeholders as appropriate. So far ten

countries covered by the review do so

formally, for example, by providing

copies of the ethics code or including

cancellation clauses in contracts. In

other countries procedures are more

informal, and this is a focus for

attention in the year ahead.

SOCIAL ASPECTS OF

ALCOHOL AND GAMING

Since the earliest times, alcohol has

played an important part in social life

and community celebrations. Today, in

diverse cultures around the world,

many millions enjoy having a drink,

while relaxing with friends and family.

SAB fully recognises, however, that a

small minority is at risk from alcohol

abuse, and this can cause serious

problems, for individuals, their families

and society as a whole.

That is why we adopt a highly

responsible approach to advertising

and promotion, with stringent codes,

especially to protect young people.

PARTNERSHIPS FOR

PUBLIC EDUCATION

Along with others in our industry, we

fund consumer education, warn of the

dangers from misusing our products,

and support research into the

incidence of alcoholism. In South

Africa, SAB was a founder member

of the Industry Association for

Responsible Alcohol Use (ARA) and is

a member of the Washington-based

International Center for Alcohol

Policies (ICAP).

In other countries, we are adopting a

similar developmental role. For

example, in Botswana, Kgalagadi

Breweries is helping to implement a

new code of advertising and promotion

practice.

The accountability review asked each

group company to outline its current

activities to consider social aspects of

products and services. All companies

bar three reported having active

programmes.

For example, in Botswana the two

SAB companies contribute 1%

of profit after tax each year to the

KMS Trust, which contributes to

social developments, including social

aspects of products and services.

The trust board comprises members

of management and community

representatives, and meets formally

four times a year to review requests

and amend policies.


33

Responsible

gaming:

The South African casinosector launched a NationalResponsible GamblingProgramme (NRGP) in June2000, run by the NationalCentre for the Study ofGambling at the University ofCape Town. Southern Sun’sGaming Division is a fullparticipant in the programme,which addresses problemsassociated with pathologicalgambling through research,public education andawareness, treatment andcounselling.

Activities include stafftraining, public servicecampaigns, new researchinto treatment and a ‘problemgambling’ free helpline.Southern Sun contributed

R773,441(US$105 445) tothe programmein the currentyear, around15% of thetrust’s totalbudget, basedon its size in theindustry.

RESPONSIBLEPROMOTION

This year’s accountability review asked

all group companies to report any

breaches of marketing laws or industry

codes concerning their advertising or

promotional practices: there was no

incidence in any SAB company. It also

asked about complaints made to

standard-setting bodies, not involving

formal breaches. Only two instances

were reported:

● Appletiser’s Valpré radio and print

campaign prompted two complaints

to the Advertising Standards

Authority; as a precaution, the

company modified the materials and

the complaints were not pursued;

● in Zambia, the deputy

minister of religious

affairs complained

about one particular

advertising hoarding,

which was

immediately taken

down.

As a company which

spends some

US$201 million on

advertising, marketing

and other promotions

each year around the

world, we believe this to

be an exemplary record,

demonstrating the

seriousness with which

group companies

address their responsibilities in

marketing.

COMMUNITIES

SAB companies have a long tradition

of contributing to the communities in

which they operate. In addition to

social benefits, the business gains

from improvements to the

macroeconomic environment – more

job opportunities, improved

education, better health and welfare

services. We are committed to

continuing support for a wide range

of corporate social investment (CSI)

programmes run and supported by

our operating units, funded from the

revenues they generate, as they

know best the local needs.


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Promoting

responsible

alcohol

consumption in

Poland:

Alcohol consumption in

Poland – previously among

the highest in the world – is

falling, partly helped by a

switch from spirits to beer. In

1992, average per head

consumption was the

equivalent of 10 litres of 100

percent pure alcohol each

year; by 1998, it had

dropped to 6.8 litres. At the

same time, beer is growing

as a share of the total, rising

from 31% in 1995 to reach

42% in 1998.

Despite this positive trend,

Kompania Piwowarska,

SAB’s Polish subsidiary,

recognises some people

remain in danger of abusing

its products. It has adopted

a 14-point voluntary code on

marketing and promotions,

especially to protect minors,

which is more restrictive

than legislative requirements.

With the rest of the industry,

it is funding a TV campaign

‘Drunk drivers cause death’

and another ‘Don’t sell to

underaged’. In addition to

such voluntary initiatives,

1% of excise taxes are paid

to the National Anti-Alcohol

Agency, PARPA, a

government agency with

representatives in local

communities.

A limited number of strategic community

investments are also undertaken by the

group corporate accountability

department on behalf of SAB plc, while

some projects with regional impact will

be undertaken at divisional level.

COMMUNITYENGAGEMENT

Currently our groupwide CSI

programme employs the equivalent of

30 full-time members of staff through-

out the business. Individual employees

in several companies are also directly

involved in supporting our projects. In

Uganda, for example, up to one hour

of working time a month can be set

aside for volunteer projects, while in

Swaziland up to five percent of working

time can be used for volunteering.

This year, SAB contributed

US$9 million worldwide through

CSI projects. This represents 1.4%

of group pre-tax profits, high by

international norms, but slightly down

on last year’s 1.8%. Over half of all our

social investment is directed towards

projects that support either education

or general community welfare.

SAB educational programmes include:

● China, where Shenyang brewery

has donated approximately

US$18,000 to each of four schools,

focused on cities that have limited

access to funds and resources.

● In Kenya, SAB sponsors a trophy for

educational excellence in the Thika

community.

● Extensive improvements, including

the building of new classrooms and

renovation of the water system, have

been made to two schools in

Zambia; the Senanga Primary

School and the Matero High School.

● Beer South Africa has contributed

to the Model United Nations High

School Debate, a debating

competition designed to promote a

cross culture of learning in high

school, stimulate cross cultural

exchange, instil a sense of global

citizenship and help develop

potential future leaders.

● Appletiser has provided

sponsorship to the Community

College in Elgin, which seeks to

develop both adults and children

from disadvantaged communities,

with holiday courses and

leadership programmes. Two

Appletiser employees are

participating in the college’s adult

basic education and training

programme.


35

Education 26%

Welfare 33%

Health 13%

Environment 3%

Arts, culture and recreation 4%

Other 21%

COMMUNITY SPENDBY FOCAL AREA

% spend on community contributionsby subject


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Zanzibar Malaria

Eradication

Project, Tanzania:

Malaria is the biggest singlekiller in Tanzania. Any effortto check the spread andincidence of the diseasemakes a significantcontribution to theimprovement of people’slives. Zanzibar is an islandoff the coast of Tanzania, notpreviously a strong marketfor beer.

During the year, TanzaniaBreweries donated Tsh10million (US$11,000) to the Zanzibar MalariaEradication Project, whichsupplies malaria treatmentand preventive drugstogether with pesticide tospray mosquito breedinggrounds. This has broughtclear benefits to thecommunity and helped thecompany’s presence andawareness of its products inZanzibar. Involvement in theproject, and ourcommitment to improvingthe standard of life, has alsoforged closer links with localand central governmentagencies and other keystakeholders.

Kwase Kwaza

Women’s Group,

South Africa:

Southern Sun is working with awomen’s group aligned to theAlexandra Chamber ofCommerce to set up arestaurant in a township nearJohannesburg. The aim is to filla ‘niche’ in quality traditionalcooking and to createemployment in the region, boththrough its direct operationand by re-investing revenue insimilar roll-out projects.Women taking part gaintraining and experience as wellas employment opportunities.

Southern Sun has contributedexecutive time, training andtrading equipment to theproject. Employees helping inthe project gain a broaderunderstanding and experienceof community life, useful intheir day-to-day work.

An equally wide range of welfare

projects took place during the year,

including:

● In Zambia, several feeding

schemes, including food to

Fountain of Hope, Mother Teresa

Hospice and Kasisi Orphanage;

● In Swaziland, Christmas hampers

provided to local hospices;

● In the Canary Islands, professional

and social assistance for

disadvantaged people through the

Tenique Foundation; and

● Beer South Africa continues its

support of Women in Rural Areas

(WIRA), a rural women’s group to

empower villagers and promote

vibrant socio-economic centres.

Since inception, WIRA has

established successful enterprises

ranging from poultry farming, brick-

making, jam and juice-making,

mohair jerseys for export markets,

bakeries and embroidery.

Our Polish breweries support a wide range of cultural events in the community

Among other schemes receiving

support were:

● Environment: Southern Sun’s

R100,000 (US$13,633) to the Save

Chapman’s Peak Campaign – an

important attraction for the tourism

industry – following devastating

fires and rock falls in the Cape

Peninsula.

● Health: restoring Mawenzi Hospital

Outpatient Department in Tanzania,

at a cost of US$52,000, which had

become almost non-operational.

● Arts and culture: Our Polish

breweries support a range of

projects, including the Summer

Polish Film Festival, the

International Music Festival, and

the International Film Festival in

Poznan.

These and the many other schemes

supported by SAB companies bring

genuine benefits to their local

communities and support the

commercial success of the company.

Most are chosen in response to

appeals, rather than as part of a

planned strategy following community

consultation and evaluation of the

business case. We intend to develop

our approach, encouraging a larger

proportion of CSI spend into long-

term projects that benefit both local

communities and the business. We

also intend to adopt benchmarking

techniques, learning from the best

international practices.


37

What you think

matters

SAB companies regularlyconsult with stakeholders intheir local communities aboutspecific aspects of day-to-dayoperations and overallperceptions of the company.Some of the larger businessesalso undertake formal attitudesurveys. For example, BeerSouth Africa was consideredthe corporate citizen in SouthAfrica as stated in theBusiness Social Monitor 2000,which researches theperceptions and attitudes ofkey role players on corporatesocial investment issues.

This Corporate CitizenshipReview aims to explain ourapproach to a wider audience,demonstrating the socialimpact of our operationsaround the world. Please let us have your comments to:[email protected], or fax +27 11 339 2389

Chapman’s Peak


American Society for Training and Development www.astd.org

International Center for Alcohol Policies www.icap.org

Industry Association for Responsible Alcohol Use www.ara.co.za

National Occupational Safety Association www.nosa.co.za


Documents

SOUTH AFRICAN BREWERIES plc