Ernest (Graham) Mackay
Age: 59
Company: SABMiller
Year named CEO: 1999
Company employees: 60,000
12-month adjusted stock performance: 21.4 percent
Compensation: £6.05 million ($12.06 million)*
It’s been ten years since Graham Mackay, the chief executive of beer giant SABMiller, relocated the company from South Africa to London to be at the center of the massive industry consolidation he saw coming.
Since then Mackay has carried out a string of acquisitions that have transformed the former South African Breweries into one of the largest beverage companies in the world. The company’s brands include Pilsner Urquell, Grolsch, Peroni Nastro Azzurro, Castle Lager and Miller.
“There has been dramatic consolidation in the beer industry since the Berlin Wall came down,” says Mackay. “The brewing industry has moved from about 16 percent in the hands of the top four players worldwide to something like 56 percent now.”
SABMiller’s market clout has helped it resist the pressures of the current recession. The company reported last month that the volume of lager it sold in its financial year ended March 31 rose 2 percent, and revenues rose 6.2 percent, to $25.3 billion. Hit by high commodities prices and volatile foreign exchange rates, net profit slipped 7 percent, to $1.88 billion.
“We make an affordable luxury,” Mackay says. “People may postpone buying a new car or designer jeans, but they are still willing to spend a little extra to get a beer in a pub instead of buying a cheap bottle at the supermarket.”
Mackay is the son of a Royal Air Force pilot who was shot down in World War II and took part in the real Great Escape from the Nazi Stalag Luft III in 1944. He grew up in Swaziland, South Africa and Rhodesia — now Zimbabwe. That may explain his taste for emerging markets. Although Mackay hasn’t ignored developed markets, he has concentrated on the fast-growing emerging markets in Africa,
Asia, Eastern Europe and Latin America. Despite the recession, the company is continuing to build five new breweries in Russia, Sudan, Tanzania, Mozambique and Angola.
“They were perceived to be a risk stock because of their exposure to emerging markets, but it’s been just the opposite,” Edward Peter-Hoblyn, fund manager at Mirabaud Investment Management, says of SABMiller.
The global spread of the company’s activities does present some challenges, though. SABMiller reports its results in dollars, so its bottom line is subject to the impact of currency fluctuations against the dollar. Sharply higher grain prices in the past two years have also taken a toll on profits. Mackay says the effects of currencies and commodities “are more important to our results right now than trading activities.”
* For the fiscal year ended March 31, 2008.
