“Over the past few years, brewers from mature, stagnating beer markets have been investing in emerging markets,” explained Rabobank Analyst, Francois Sonneville. “The favourite destinations have been the BRICs and Asia, but as these countries mature growth rates are declining. Based on demographics and economic developments, we believe that Africa will be the continent to witness the fastest growth over the next five years.”
Africa is expected to see the largest increase in the legal drinking age population between 2013-2018; at the same time as the birth rate in Latin America and Asia is due to slow. At the same time, in Western Europe and North America, the cumulative decline in beer volumes since 1998 has been between 5 percent and 10 percent and has led to diseconomies of scale and overcapacity for many local brewers.
The consumption of beer per capita is also set to increase globally, with GDP levels expected to rise across the globe as the mature markets emerge from recession. This effect is particularly significant in Africa given limited disposable incomes and the relatively high price of beer.
Increases in wages in emerging markets have a significantly greater effect on the spending pattern for beer than they do in mature markets. 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. Thus any change in income in the US is unlikely to lead to change in beer purchases beyond trading up and spending more money per beer.
In Africa, beer is still an emerging and exciting category and the trend shows that it is winning over consumers. At the same time, operating in Africa is not straightforward, and the report advises brewers to observe the many pitfalls the continent provides.
For example there are certain countries in Africa where religious tensions are leading to restrictions on alcohol consumption. Though not strictly a change in consumer preferences, these restrictions can have a significant impact on beer consumption in a country or a region. Exporting is recommended a good way to explore opportunities on the continent without too much risk exposure and using existing supply chain infrastructure means capital investments would be low.
When exposure to Africa becomes more structural and significant, the report suggests brewers should consider local production. In most situations, transportation costs can be reduced and brewers would be less exposed to the high and volatile import duties. 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.
For more information about this publication please contact its author
Francois Sonneville: firstname.lastname@example.org +44 20 7809 3811
For other information, please contact Rabobank press office:
email@example.com+31 30 21 66918
For your social media ready version of this press release:
Follow us on Twitter: