Southern Africa Food and Drink Report Q3 2012

Published: June 2012

Publisher: Business Monitor International (BMI)

Product ref: 141861

Pages: 87

Format: PDF

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Report description

Angola BMI View: Angola has one of the strongest economic growth outlooks in Sub-Saharan Africa, and we are unsurprisingly bullish on the prospects for food, beverage and mass grocery retail sales growth in the country over our forecast period. The continued expansion of the domestic oil industry will be the chief driver of strong economic expansion, with investment in infrastructure (to support the development of the oil sector) also a major contributor. Oil- and export-led economic growth will feed into a positive outlook for private consumption over our forecast period, which translates into bright prospects for the consumer sector.

Key Forecasts ?? Per capita food consumption, compound annual growth rate in local currency 2011- 2016: 13.8% ?? Beer production growth in 2012: 15.9% year-on-year (y-o-y); compound annual growth rate to 2016: 12.7%.

?? Mass grocery retail sales growth in 2012: 19.8% y-o-y 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; however, we also expect the steady introduction of new store offerings, such as non-food products, to help to support growth. In Angola, we estimate that only around 5% of grocery retail sales are accounted for by the organised sector; this provides tremendous room for growth.

Beverage Sector Growth: We expect to see strong beverage sales growth throughout the region over our forecast period to 2016 and 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, driving strong sector growth. At an estimated 45 litres per annum, Angola already has a high beer consumption level and a relatively well-developed beer sector by regional standards.

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 still persist. Angola’s population dynamics are a major positive for investors. The country’s already attractive 19.6mn-strong population base (as of 2011) will grow to 24.8mn by 2020 and by an enormous 109% on the 2011 level to 42.3mn in 2050. Most notable is the age profile of the population; in 2012, an expected 57% of Angola’s population will be younger than 20, and this provides immense long-term growth opportunities for regional investors. Risk/Reward Ratings: Angola falls in an impressive third place out of 13 regional markets in BMI’s Food & Drink Risk/Reward Ratings for Sub-Saharan Africa. The country scores well above the regional average in terms of rewards – an illustration of the massive growth opportunities available in the region. However, it also scores well below average in terms of risk, highlighting the challenge that investors face in fully realising this potential opportunity. Overall, Angola ranks comfortably above the Sub-Saharan average in our regional ratings.

Botswana BMI View: Amid solid but unspectacular mining-led economic growth, we expect to see below-trend private consumption growth of 5.5% in 2012 and 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: 9.2% (local currency) in 2012; compound annual growth rate to 2016: 9.3%

?? Beer sales growth: 2.0% in 2012; compound annual growth rate to 2016: 2.8% 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. The country’s 2.1mn-strong population base (as of 2011) will grow to 2.2mn by 2020 and by 19% on the 2011 level to a forecast 2.5mn in 2050. Botswana’s population – and population growth – is below most of its neighbours, it has appealing age dynamics. According to our 2012 forecasts, 43% of Botswana’s population is younger than 20; this provides solid long-term growth opportunities for regional investors.

Risk/Reward Ratings: Botswana falls in a reasonably impressive ninth place out of 13 regional markets that are ranked for Sub-Saharan Africa within BMI’s Food & Drink Risk/Reward Ratings. The country scores below the regional average in terms of rewards, while scoring well above the regional average in terms of risk. Overall, Botswana ranks a little above the Sub-Saharan Africa average in our regional ratings.

Mozambique BMI View: We expect robust private consumption growth in Mozambique over the course of our fiveyear forecast period to 2016. As the country’s export sector expands, largely as a result of the ongoing development of its mining sector, private consumption’s overall contribution to GDP will decline. That said, the country’s favourable demographic profile, coupled with rising disposable incomes as the exploitation of natural resource wealth feeds down into the wider economy, mean that we have a very optimistic outlook towards Mozambique’s consumer-facing industries.

Key Forecasts ?? Per capita food consumption growth (local currency) in 2012: 11.1%. Compound annual growth rate to 2016: 11.4%. ?? Beer volume sales growth in 2012: 8.5%. Compound annual growth rate to 2016: 8.3%. 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; however, we also expect the steady introduction of new store offerings, such as non-food products, to help to support growth. In Mozambique, we estimate that only around 2-3% of grocery retail sales are accounted for by the organised sector and this provides tremendous room for growth.

Beverage Sector Growth: We expect to see strong beverage sales growth throughout the region over our forecast period to 2016 and 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, driving strong sector growth. At an estimated 9 litres per annum, Mozambique’s beer consumption levels remain low by regional standards and this provides enormous potential for sales 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 still persist. Mozambique’s population dynamics are a plus point for investors. The country’s already attractive 23.9mn-strong population base (as of 2011) will grow to 29.2mn by 2020 and by an enormous 110% over our entire forecast period to stand at 50.2mn in 2050. Most notable is the age profile of the population; in 2012, 54% of Mozambique’s population is forecast to be younger than 20, and this provides immense long-term growth opportunities for regional investors.

Namibia BMI View: Strong private consumption growth from an already reasonably high base (Namibia is one of the wealthiest countries in Sub-Saharan Africa) is behind our positive outlook for the food, beverage and retail sector in Namibia. We stress that the market does not enjoy the favourable population demographics of some of its regional neighbours, and we are forecasting fairly slow population growth.

However, rising incomes will support the continued development of the country’s consumer industries and is expected to result in greater investment in the market over our forecast period.

Key Forecasts ?? Total food consumption growth (local currency) in 2012: 9.2%. Compound annual growth rate to 2016: 8.6%.

?? Mass grocery retail sales compound annual growth rate to 2016: of 9.8%. 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; however, we also expect the steady introduction of new store offerings, such as non-food products, to help to support growth. In Namibia, we estimate that around 38% of grocery retail sales are accounted for by the organised sector. This is comfortably ahead of most regional markets, although it does still allow room for solid growth.

Beverage Sector Growth: We expect to see strong beverage sales growth throughout the region over our forecast period to 2016 and 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, driving strong sector growth. At an estimated 40 litres per annum, Namibia already has a high beer consumption level and a relatively well developed beer sector by regional standards.

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 still persist. Namibia’s population dynamics – while not as enticing as many of its regional peers – are still a plus point for investors. The country’s strong population base, an estimated 2.3mn in 2011, will grow to 2.7mn by 2020 and by more than 50% on the 2011 level to 3.6mn in 2050. While this makes Namibia a lot smaller and slower-growing than most of its neighbours, the country does share similarly appealing age dynamics. In 2012, we forecast 47% of Namibia’s population to be younger than 20, and this provides solid long-term growth opportunities for regional investors.

Risk/Reward Ratings: Namibia falls in joint 11th place out of 13 regional markets that are ranked for Sub-Saharan Africa within BMI’s Food & Drink Risk/Reward Ratings. The country scores below the regional average in terms of rewards while scoring well above the regional average in terms of risk. Overall, Namibia ranks a little below the Sub-Saharan Africa average in our regional ratings.

Zambia BMI View: Our positive outlook for the Zambian food, drink and mass grocery retail sectors is predicated on our favourable outlook for the country’s economy. Mining and agricultural growth, coupled with increased consumer spending, will drive economic expansion over our forecast period, in turn driving strong sales growth across Zambia’s consumer industries. In addition to economic expansion, our favourable view for the sector is fuelled by the country’s highly attractive demographic profile and the relatively benign (at least on a regional scale) inflationary outlook.

Key Forecasts ?? Total food consumption growth (local currency) in 2012: 10.6%. Compound annual growth rate to 2016: 10.5%.

?? Mass grocery retail sales growth in 2012: 22.3%. Compound annual growth to 2016: 18.7%. 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; however, we also expect the steady introduction of new store offerings, such as non-food products, to help to support growth. In Zambia, we estimate that only around 10% of grocery retail sales are accounted for by the organised sector and this provides strong room for growth.

Beverage Sector Growth: We expect to see strong beverage sales growth throughout the region over our forecast period to 2016 and 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, driving strong sector growth. At an estimated 8 litres per annum, Zambia’s beer consumption levels remain low by regional standards and this provides enormous potential for sales 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 still persist. Zambia’s population dynamics are a major plus point for investors. The country’s already fairly attractive 13.5mnstrong population base (as of 2011) will grow to 17.9mn by 2020 and at an incredible rate of more than 200% over our entire forecast period to stand at 45mn in 2050. Most notable is the age profile of the population – in 2012, 57% of Zambia’s population is forecast to be younger than 20, and this provides immense long-term growth opportunities for regional investors.

Risk/Reward Ratings: Zambia falls in an impressive sixth place out of 13 regional markets that are ranked for Sub-Saharan Africa within BMI’s Food & Drink Risk/Reward Ratings. The country comes in just below the regional average in terms of rewards – an illustration of the very low existing spending levels and the very low base from which growth is forecast to occur. However, it scores above the regional average in terms of risk. Overall, Zambia ranks just above the Sub-Saharan Africa average in our regional ratings.

Table of contents

Chapter 1 - BMI Industry View

Angola

Botswana

Mozambique

Namibia

Zambia

Chapter 2 - Business Environment

SubSaharan Africa Food & Drink Ratings

Table: Risk/Reward SubFactor Ratings Q (scores out of )

Table: SubSaharan Africa Food & Drink Risk/Reward Ratings Q

Chapter 3 - Macroeconomic Forecast Scenario

Angola

Table: Angola – Economic Activity

Botswana

Table: Botswana – Economic Activity

Mozambique

Table: Mozambique – Economic Activity

Namibia

Table: Namibia – Economic Activity

Zambia

Table: Zambia – Economic Activity

Chapter 4 - Industry Forecast

Angola

Food

Table: Angola – Food Consumption

Drink

Table: Angola – Soft Drinks

Table: Angola – Alcoholic Drinks

Mass Grocery Retail

Table: Angola – Mass Grocery Retail Sales

Botswana

Food

Table: Botswana – Food Consumption

Drink

Table: Botswana – Soft Drinks

Table: Botswana – Alcoholic Drinks

Mass Grocery Retail

Table: Botswana – Mass Grocery Retail Sales

Mozambique

Food

Table: Mozambique – Food Consumption

Table: Mozambique – Sugar Confectionary

Table: Mozambique – Meat

Table: Mozambique – Preserved Fish

Table: Mozambique – Snack Foods

Table: Mozambique – Sweet Biscuits

Table: Mozambique – Bread Products

Table: Mozambique – Pasta

Drink

Table: Mozambique – Soft Drinks

Table: Mozambique – Alcoholic Drinks

Mass Grocery Retail

Table: Mozambique – Mass Grocery Retail

Namibia

Food

Table: Namibia – Food Consumption

Drink

Mass Grocery Retail

Table: Namibia – Mass Grocery Retail

Zambia

Food

Table: Zambia – Food Consumption

Mass Grocery Retail

Table: Mass Grocery Retail

Chapter 5 - Market Overview

Southern Africa A Great Opportunity For Multinationals

Chapter 6 - Demographic Forecast

Angola

Table: Angola – Population By Age Group, ‘

Table: Angola – Population By Age Group, % Of Total

Table: Angola – Key Population Ratios

Table: Angola – Rural & Urban Population

Botswana

Table: Botswana – Population By Age Group, ‘

Table: Botswana – Population By Age Group, % Of Total

Table: Botswana – Key Population Ratios

Table: Botswana – Rural & Urban Population

Mozambique

Table: Mozambique – Population By Age Group,’

Table: Mozambique – Population By Age Group, % Of Total

Table: Mozambique – Key Population Ratios

Table: Mozambique – Rural & Urban Population

Namibia

Table: Namibia – Population By Age Group, ‘

Table: Namibia – Population By Age Group, % Of Total

Table: Namibia – Key Population Ratios

Table: Namibia – Rural & Urban Population

Zambia

Table: Zambia – Population By Age Group, ’

Table: Zambia – Population By Age Group, % Of Total

Table: Zambia – Key Population Ratios

Table: Zambia – Rural & Urban Population

Chapter 7 - Risk/Reward Ratings Methodology

Table: Rewards

Table: Risks

Weighting

Table: Weighting

Chapter 8 - BMI Food & Drink Industry Glossary

Food &rink

Mass Grocery Retail

Chapter 9 - BMI Food & Drink Forecasting & Sourcing

How We Generate Our Industry Forecasts

Sourcing

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By sector: General drinks

By market: Africa