Bavaria S.A.

Bavaria is SABMiller's industrial operation in Colombia and the most important industrial beverage conglomerate in the country. Bavaria is comprised of seven breweries located in Barranquilla, Bogotá, Bucaramanga, Cali, Duitama, Medellín and Tocancipá. There are two malting plants, one in Tibitó and the other in Cartagena. These breweries and plants manufacture, distribute and sell beer, malts and water.

SABMiller is one of the largest brewing companies worldwide, with the highest volume and operations in four continents with a production that exceeds 216 million hectolitres of beer and offers more than 170 brands.

Company History

 * 1889: April 4th, the corporation “Kopp’s Deutsche Brauerei Bavaria” was created
 * 1930: Consorcio de Cervecerías Bavaria was created, as a result of the merger of Kopp’s Deutsche Brauerei and other regional breweries
 * 1959: Consorcio de Cervecerías Bavaria changed its name to Bavaria S.A.
 * 1973: Cervecería Bavaria was inaugurated in Bogotá
 * 1981: Bavaria became an open corporation with shares at the Colombian Stock Exchange
 * 1994: Production of bottled drinking water and fruit refreshments started
 * 1996: Grupo Empresarial Bavaria was created (GEB)
 * 1997: First split of Valores Bavaria, which separated Bavaria S.A. to be exclusively focused on beverages (consolidated in 2001)
 * 2002: Launching of Águila Light beer & GEB invested in Corporation Backus of Peru and purchased the majority of shares with the right to vote
 * 2003: GEB increased its shares in Backus, issued US$500million in bonds and this became the largest issue by a company in the Andean region
 * 2004: Agua Brisa with gas and Malta Leona Cool were launched to the market & GEB became the 10th largest brewing group in the world
 * 2005: October, GEB became part of SABMiller & Brava was launched
 * 2006: March, Brisa Spa (flavored water) was launched & in September, Peroni was launched and became the 1st SABMiller international brand in Colombia
 * 2007: January, the new image of Pilsen was launched. March, the new image of Brava was launched.  April, Barena becomes part of the international brand portfolio.  June the new image of Águila and Pony Malta was launched.  July, the Brisa Gas Limon was launched.  October, Redd’s the first beverage designed exclusively for women is launched.

Historical Financial Information
2004 Annual Financial Report

Political and Public Influence
Business executives from different economic sectors have chosen Bavaria as the most admired company in Colombia for its fourth consecutive year. Study completed by Portafolio Economic and Business Journal and revealed on May 30, in Elite Empresarial 2008. The study confirmed Bavaria as the company with the following honors: the best social contribution (same position as last year) the most powerful brand (for the third year), and the best managed company (a new category in the study).

A survey by the Human Management Association (ACRIP) in their investigation on the employer of choice a few months ago showed that 93 out of 1000 Colombians would like to work for Bavaria. The survey of 1284 people in 5 main Colombian cities included undergraduate and graduate students and employees of companies reporting sales above 40,000 million pesos. The top 10 ranking was led by Ecopetrol followed by Bavaria and was based on some of the following reasons: labor stability, remuneration, trajectory and soundness, benefits, compensations and professional development.

Corporate Accountability
A Corporate Governance code was adopted in 2002 that was recommended by the International Finance Corporation and complies with the regulations of the Colombian Superintendency of Securities. The rules aim to: promote social responsibility culture; guide the company into the market; implement the best management practices; and develop human talent. July 2006 In Colombia, direct foreign investment (IED) has grown from record levels last year, with US$3.921 million in investments. Nevertheless, the total of this 2005 investment growth is not a consequence of the production of new units created or the instalment of services, but rather because of the sale of national businesses (denationalization) such as Bavaria, Coltabaco, Granahorrar and Avianca to foreign businesses, without generating an aggregate value for the country. It is important to mention also that the IED in Colombia is emphasized for being the product of the privatization process in state companies in the financial sector and in public utilities since the 1990s. In the period between 1996 and 2005, 59.4% of the IED in Colombia has been concentrated on the service sector and only 19.3% on the manufacturing sector.

Human Rights
May 17, 2007 Jailed warlord Salvatore Mancuso, testifying as part of a peace deal with the governments accused Bavaria and Postobon of paying “taxes” to the paramilitaries in return for permission to operate along the Atlantic coast, which has been a longtime stronghold of the illegal mafia. Mancuso alleges that the high-ranking executives of both companies were aware of the payments, which began in the 1990s. Until its sale to SABMiller, Bavaria was owned by Julio Mario Santodomingo, one of the two Colombians listed as among the world’s 500 richest men by Forbes magazine. Bavaria denies these allegations: "Bavaria has not made payments of any kind to illegal groupings operating in various areas of Colombia."

May 17, 2007: Press Release from Bavaria “For the past 118 years, Bavaria and its subsidiaries have been operating across the country in a responsible manner, dutifully respecting both the laws in effect and the legally established authorities. We strongly believe in the future of Colombia, and we are committed to continue investing in the country, generating economic benefits for shareholders as well as the country. Contrary to the allegations reported in the media, Bavaria has not made payments of any kind to illegal groupings operating in various areas in Colombia. Bavaria also confirms that it has not made any such payments to any of its distributors, whether they operate in regions affected by public order or not. The distributors of Bavaria products are legally independent and autonomous entities, which buy products from Bavaria, in order to resell them to retailers. Bavaria management has meticulously checked all compensation made to third party distributors over the past decade, and can confirm that there is no evidence of any payments, other than normal compensation consistent with the trading and transportation of its products and the conditions stated in formal distributor contracts. Bavaria regrets these allegations and stands ready to support any further investigations in this regard."

Social Responsibility Initiatives
On its website Bavaria states that "DestapaFuturo is the most important private entrepreneurial initiative program in Colombia. This program promotes entrepreneurs in the country to turn their ideas and activities into self-sustainable companies with solid ground to grow upon.  These entrepreneurs are trained to design business plans and receive strategic guidance to focus projects towards actions that satisfy the market’s needs."

Business Scope
Non-Alcoholic Brands: Alcoholic Brands:
 * Agua Brisa
 * Agua Brisa with gas
 * Agua Brisa with gas-Lemon
 * Agua Brisa Spa
 * Malta Leona
 * Malta Leona Cool
 * Pony Malta
 * Águila
 * Águila Light
 * Barena
 * Brava
 * Club Colombia
 * Costeña
 * Leona
 * Peroni
 * Pilsen
 * Póker
 * Redd’s

Contact Information
Central Office: Calle 94 No. 7A – 47 Bogotá, Colombia Tel: +571-610-0200 Fax: +571- 610-0359 http://www.bavaria.com.co