Botswana Food and Drink Report Q1 2013

BMI View: Amid solid but unspectacular mining-led economic growth, our Africa team is forecasting real private consumption growth of 4.5% in 2013. In comparison, private consumption growth expanded by an annual average of 7.4% over 2006-2011. There are a number of reasons for the moderation, including base effects, unemployment levels and muted wage growth, and this has fed through into our outlook for Botswana’s food, drink and mass grocery retail sectors. In general, we hold a less positive view towards the industry in Botswana than we do in the wider Sub-Saharan African region over our forecast period.

Key Forecasts

Total food consumption growth 2013: 9.3% (local currency); compound annual growth rate to 2017: 9.3%

Beer sales growth: 2.0% in 2013; compound annual growth rate to 2017: 3.3%

Key Trends

Organised Retailing: All Southern Africa markets lag regional leader South Africa in terms of the presence of organised grocery retailing. Across the region, formalisation will be a key driver of mass grocery retail sales growth, as more and more shoppers trade up to organised retail channels. This will be true even for the region’s more mature markets, though we would also expect the steady introduction of new store offerings, such as non-food products, to support growth. In Botswana, we estimate that around 40% of grocery retail sales are accounted for by the organised sector. This is comfortably ahead of most regional markets, although it still allows room for solid growth.

Beverage Sector Growth: We expect to see strong beverage sales growth throughout the region over the forecast period and well beyond. There is enormous potential in beer and soft drinks, specifically carbonates, at this stage of the region’s development. Throughout the region the beer market is already keenly contested, and this level of competition will lead to significant new investment over our forecast period, thus driving strong sector growth. At an estimated 18 litres per annum, Botswana has fairly average levels of beer consumption by regional standards, and there is still room for steady growth.

Demographic Appeal: Demographics are a key component of the region’s appeal, given the very low base from which most growth is occurring and the severe income inequalities that persist. Botswana’s population dynamics – while not as enticing as many of its regional peers – are still a plus point for investors.

Table of contents

Chapter 1 - BMI Industry View

Chapter 2 - Business Environment

BMI’s Core Global Industry Views

Table: Core Views

Sub-Saharan Africa Risk/Reward Ratings

Table: Sub-Saharan Africa Q Food & Drink Risk/Reward Ratings

Macroeconomic Outlook

Table: Economic Activity

Chapter 3 - Industry Forecast

Food, Drink, Mass Grocery Retail

Food Consumption

Table: Food Consumption Indicators, -

Drink

Table: Carbonated Soft Drinks Volume Sales, Production & Trade, -

Table: Beer Volume Sales, Production & Trade, -

Mass Grocery Retail

Table: Mass Grocery Retail Sales, -

Chapter 4 - Market Overview

Southern Africa: A Great Opportunity For Multinationals

SABMiller’s Sechaba Breweries: SSA’s Most Efficient Beer Company?

Chapter 5 - Demographic Outlook

Table: Botswana’s Population By Age Group, - (‘)

Table: Botswana’s Population By Age Group, - (% of total)

Table: Botswana’s Key Population Ratios, -

Table: Botswana’s Rural And Urban Population, -

Chapter 6 - Risk/Reward Ratings Methodology

Table: Rewards

Table: Risks

Weighting

Table: Weighting

Chapter 7 - BMI Food & Drink Industry Glossary

Food & Drink

Mass Grocery Retail

Chapter 8 - BMI Food & Drink Forecasting & Sourcing

How We Generate Our Industry Forecasts

Sourcing

Related research categories

By sector: General drinks

By market: Botswana (in Africa)