“Based on future demographics and economics, Africa emerges as the most interesting opportunity, provided brewers select the right operating model and can deal with the continent’s unique challenges in day-to-day operations,” a Rabobank International report said.
In the past 15 years, global beer consumption has been growing at an average rate of 3 per cent per annum. While there were marginal increases in the 2008 and 2009 recession, the world’s taste for beer never waned.
“Volumes have grown fast in Asia, Africa and Latin America and declined in highly saturated mature markets such as Europe or North America,” the report explained.
“Despite economic recovery, beer volumes in mature markets are unlikely to recover in the near future.”
While Asia is expected to remain an important force behind the growth in global beer consumption, the region will likely cease to be the fastest-growing market and will be overtaken by Africa.
“The overall GDP rise in Africa will have a much greater effect on beer consumption. Per capita beer consumption will continue to grow in Asia but not as fast as in Africa. [This is] as growth in Asia is less sensitive to changes in GDP than in Africa, although it is more so than in Europe or the Americas,” said Rabobank.
Rabobank figures indicated that between Africa, Asia, Latin America, North America, Western and Eastern Europe, Africa clocked in the highest expected annual beer consumption growth at six per cent between 2013 and 2018.
Asia followed with 3.6 per cent annual beer consumption growth for that period, followed by Latin America with 2.9 per cent. The three regions also recorded the highest GDP growth projections of between five and 7.5 per cent for the 2013 to 2018 period.
“While per capita beer consumption generally rises when GDP increases, the effect is strongest at low levels of GDP due to the relatively high price of beer, increases in wages in emerging markets will have a significantly greater effect on the spending pattern for beer than they do in mature markets,” Rabobank explained.
“For example, in Tanzania, it takes the average worker just over five hours of labour to earn a beer, while in the US it takes just 15 minutes.”
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The African beer market is dominated by companies such as SAB Miller, Castle, Heineken and Diageo, creating a particularly tough market to break into. Those entering Africa’s beer market are however likely to succeed by targeting niche markets within the continent.
“Operating in Africa is not straightforward. When exposure to Africa becomes more structural and significant, brewers are advised to consider local production. By helping to set up a local supply chain, brewers could also improve the quality and image of local beer, creating a win/win situation,” said Rabobank.