Company information

Africa’s beer market still has plenty of room for growth

Brewers operating in the African market still have a lot of room for future growth as beer consumption on the continent is still far from saturation levels.

Nile Special is the flagship brand of SABMiller's Nile Breweries in Uganda.

Nile Special is the flagship brand of SABMiller's Nile Breweries in Uganda.

Imara Africa Securities says in a new research report that although Africa is the sixth largest beer producer by volume, producing 4.8% of global beer after China (23%), USA (13%), Russia (6%), Brazil (6%) and Germany (5%), it has one of the lowest global per-capita consumption rates due to the meagre purchasing power of consumers.

Average annual per capita beer consumption in Africa is 6 litres, the lowest of all regions, with the exception of the Middle East, which is significantly lower owing to its large Islamic population. “There exists significant headroom for growth in sales volumes and profit margins for African brewers,” said Imara. “Only Namibia, Botswana and South Africa have made headway in increasing per capita consumption to near saturation levels.”

Growth potential is, however, not limited to alcohol consumption patterns. Most African brewers also produce soft drinks, such as Coca-Cola under licence, and non-alcoholic beverages such as water. Imara sees significant growth prospects in these categories as personal disposable incomes in most African economies improve.

“Africa as a continent is experiencing a ballooning population with growth rates of about 2.5% to 3%. In addition, bottom-heavy demographic charts also ensure that there is scope for a sustained demand pool,” Imara noted.

According to the International Monetary Fund, Sub-Saharan Africa has recovered from the global financial crisis and the region is now second only to Asia in its rate of expansion. Domestic demand growth remains robust while commodity prices are on a positive trajectory. Overall, real activity is projected to expand by 5.5% in 2011 and 6.0% in 2012.

“These conditions, in our view tend to fuel a rise in personal disposable incomes across various geographies and therefore are supportive of the consumer sector that includes breweries and beverage companies,” said Imara.

,


Simple Share Buttons