Africa is expected to emerge as the big opportunity for brewers over the next five years

Africa is expected to emerge as the big opportunity for brewers over the next five years

Africa is expected to overtake Asia as the fastest-growing global beer market within the next five years, helped by economic development, expanding populations and rising wages, according to a new report. 

The Rabobank study, entitled Beer on the Frontier: Opportunities for Brewers in the African Continent and published today (March 24), says that, due to a likely decline in growth rates for beer in the BRIC and Asian countries, Africa will be the next major global opportunity for brewers. Africa's beer market is currently dominated by SABMiller, Castel, Diageo and Heineken, who have 90% of the market between them.

SABMiller operates in 15 African countries and a further 21 through a strategic alliance with Castel.

Africa is expected to see the largest increase in the legal drinking age population between 2013 and 2018, the report notes.

“Over the past few years, brewers from mature, stagnating beer markets have been investing in emerging markets,” says 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.” 

However, Rabobank warns that there are “many pitfalls” invovled with operating in Africa. In some countries, for example, religious tensions are leading to restrictions on alcohol.

“Exporting is recommended as 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,” Rabobank says.

But, when exposure to Africa becomes more structural and significant, the report suggests brewers should consider local production.