West African aluminium can manufacturer GZ Industries (GZI) is hoping to ride on increasing consumption of drinks to expand its business across Africa. The continent is tipped to become the world’s fastest growing beer market, according to a study by Dutch multinational banking and financial services group Rabobank.
The report, titled Beer on the Frontier: Opportunities for Brewers in the African Continent, shows brewers are looking to Africa where growth is expected to be driven by rising salaries, rapid economic growth and a growing population at a time when developed markets in Europe and the US are facing declining beer volumes.
The Nigerian company manufacturers 1.2bn cans annually for sale to Guinness, Coca-Cola, Heineken and SABMiller. Founded in 2009, GZI is also establishing its third plant in eastern Nigeria which will bring in an additional 600m cans a year when its starts production in 10 months time.
The Rabobank research shows that for the five years leading to 2018 Africa is expected to have the largest increase of legal drinkers as birth rates in other parts of the world slow down.
The soft drinks market is also displaying potential with leading players SABMiller, Coca-Cola and PepsiCo investing millions of dollars in emerging markets in the continent.
GZI chairman Dr Tunji Olowolafe told How we made it in Africa the company is expecting increasing demand for its cans across the continent. To kick-start its pan-African expansion, GZI is investing US$100m in a manufacturing plant in Kenya which will have an annual production capacity of 450m cans.
Olowolafe says Kenya made a compelling case for GZI’s first location outside Nigeria because the economy is growing rapidly, consumer purchasing power is increasing and democracy is entrenched. The Nigerian investor says he expects the Kenyan market “to grow by leaps and bounds”.
“We see Africa as an emerging market. We see Africa as a stable market and Kenya is one of the leading democracies in Africa. It was just compelling… to invest in Kenya,” says Olowolafe. “For us to have come all the way [here] only shows that democracy in Kenya is entrenched, there is rule of law and there is stability and peace. We have brought in the risk capital because of our absolute faith in Kenya.”
Kenyan brewers and soft drink bottlers currently rely on imported cans. Olowolafe says the company expects the demand for cans in the East African nation to surpass the capacity of the GZI plant under construction.
“Honestly, we want to sell more than that [450m cans]. We have done our studies, we know there is demand and we are very bullish about the economy. The Kenyan economy is growing and there will be more demand for canned drinks in coming years. So we expect good growth here. Ultimately we will ensure Kenya never has to import cans.”
GZI was founded by a group of Israeli investors who had lived and worked in Nigeria for over 30 years, led by the firm’s current managing director Motti Goldmintz. GZI opened West Africa’s first can manufacturing plant.