Africa: Brewing Potential Untapped?

By Jim Cohen | April 17, 2009 | 1 Comments |
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As Africa continues to go through "rapid" industrialization, urbanization, strong demographic and consumer growth, the continent is still surrounded by political risk and corruption. However, the breweries and beverages sector is growing. SABMiller is the only true large international player that has a significant chunk of the market. But what is the catalyst driving Africa? Why is it even growing in the first place? Do they love beer?

Foreign investment has been poured into African countries, as one of the last truly untapped economic vehicles in the world. Do not be mistaken, the investment does not compare to the economic growth of powerhouses like India and China – these are just the first steps to a larger picture. There are many obstacles and will be many to come in the future.

An example of potential upside in the market is the 2010 World Cup, which is being held in South Africa. The influx of international travelers and demand for alcoholic consumption will surely mean that beer will get its fair share of temporary exponential growth. To meet this demand, breweries must already be planning their expansion for the increase in sales – hopefully investing not only in the capacity to produce more beer, but also to produce more quality beer efficiently.

Accordingly to analyst estimates, only 10% of the current population drinks beer. Specifically, Namibia, Bostwana and South Africa have been the only countries with significant growth for beer consumers. None of these countries are even close to their full capacity. (As many other wine enthusiasts know, South Africa also has a strong history for high quality vineyards as well.) Countries posed for growth include Kenya and Nigeria, which according to analyst estimates are growing in the double digits.

The beer industry in Africa is certainly not a hot topic, especially given today's rapid growth in the American craft brewing culture. However, we like to take notice that perhaps in 20-30 years – the next revolution (and future conversations) will be centered over the explosive growth of the African beer industry.

1 Comment · Africa: Brewing Potential Untapped?

  • I agree on the big boys jumping at the hope to tap this market first, but not sure overall macroeconomic policy from various countries will hinder the attempt. With the major consolidation today, i feel it is even more evident that these brewers will have the power to enter into these markets.

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