Africa’s beer market to show the fastest growth

Hero beer SABMiller Nigeria

The African beer market is forecasted to grow faster than any other region in the next five years. The growth would be driven largely by rising population, urbanization and increased GDPs.

This was the assessment of the Canadean, a global market research company. The report states that African consumers largely depend on the products of four multinational companies that dominate the African brewery industry – notably SABMiller, Heineken, Castel Group and Diageo. In addition, interests in premium drinks are expected to rise.

“90% of the African beer market is highly consolidated with four global companies, SABMiller, Heineken, Castel and Diageo, and the markets have been effective monopolies,” said Piyumika Jayasena, analyst at Canadean.

“However, these monopolies have been challenged by emergence of new competitors in several African markets such as Ivory Coast, Kenya, Madagascar, Rwanda, South Africa and Tanzania.”

However, with the growth prospects, the continent is hampered by infrastructural challenges, outbreak of epidemics in some countries (like the 2014 Ebola scare), political unrest in some countries, and heavy excise taxes.

The report notes that beer consumption growth will continue at a similar rate to previous years. Year-on-Year growth from 2012-2014 was 4%, and is expected to reach 5% for 2015 and beyond till 2020.

When compared to other regions, this puts Africa ahead of growth in Asia (3%), Western Europe, Eastern Europe and North America (1% or less).

The report states that growth is being driven by increased GDP growth, economic development, population growth and urbanization. It cites Nigeria, as an example of a country with rising population growth, forecasted to have the world’s third largest population by 2050, according to the United Nations. In particular, the working age population demography is forecasted to surpass that of China and India.

The report notes a trend away from traditional home-brews towards the safety and reliability of commercially brewed beers.

“Africa is known for local unregulated ‘home-brews’ and due to its associated health risks, major international brewers are now actively engaged in producing similar products that could compete with the unregulated alcohol market.

“For instance, Kenya Breweries’ Senator Keg and Eagle brand by SABMiller are brewed from Sorghum. In Ghana, the Eagle brand is brewed using cassava root. Furthermore, SABMiller’s Impala brand in Mozambique and Ruut by Diageo in Ghana are also brewed from Cassava.”

Africa is forecasted to see an incremental volume increase of more than 37,000 hectoliters by 2020.

Jayasena foresees the African beer market evolve as it did in Asia: “Rapid growth driven by mainstream and economy, and then later undergoing premiumization – we are already seeing the first signs of this.”

Craft beer is unlikely to take hold but would appear in urban centers with large tourist or business economies like South Africa and Kenya. With the exception of South Africa, the segment is unlikely to become more than a niche.

South Africa is the largest beer market by volume, followed by Nigeria and Angola. In terms of Per capita consumption, the Seychelles, Equatorial Guinea and Gabon take the lead.

The report states that Ethiopia, Kenya and Zambia also show big volume growth in consumption, with Zambia expected to surpass Mozambique, Congo (Brazzaville), Ivory Coast, Zimbabwe and Burundi by 2020.

However, while Africa may experience high growth in consumption, Asia continues to hold the highest consumption level. Asia is forecasted to record 900,000 hectolitres in 2020 compared to 164,000 hectoliters in Africa, according to the Canadean. Latin America is expected to come in second at 380,000 hectoliters, followed by North America and Western Europe, which are expected to record modest growth at 270,000 hectoliters, each.

Region Forecasted Growth in Hectolitres Growth Rate (%)
Africa 164,000 hectolitres 5%
Asia 900,000 hectolitres 3%
Europe 270,000 hectolitres 1% or less
Middle East/North Africa 3%
North America 270,000 hectolitres 1% or less
South America 380,000 hectolitres  2.7%

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