London/Johannesburg - An African has to work three hours on
average to afford a beer, compared with 12 minutes for a European, and yet the
continent is the global hot spot for beer growth, such that the world' Africa's
ber shis big brewers are struggling to keep pace.
Mark Bowman, Africa boss for global brewer SABMiller [JSE:SAB], is
building new breweries in Nigeria, Uganda and Zambia this year and expanding
those in a string of other nations.
His African beer volumes, minus the relatively mature South
African market, rose in excess of 10% for the last two years as he siphoned off
custom from the homebrew sector, which is over three times the formal market.
A booming population and above-average economic performance,
backed by buoyant mining and energy industries, are behind the growth, which is
running hotter than in Latin America and Asia.
"Africa remains an extremely attractive place for
consumer goods companies. From a macro perspective, it has a growing population
and is enjoying GDP (gross domestic product) growth across most markets,"
Bowman told Reuters.
Four big brewers - SABMiller, Heineken, privately-owned
Castel and Diageo - control more than 90% of the $1bn African market, and they
are ploughing in millions.
Beer is the drink of choice in the upmarket suburban areas
of Johannesburg and also in the townships that circle the city, whether it is
SABMiller's top brews Castle and Carling Black Label or Heineken's eponymous
brew and Amstel, but price is a challenge for less well-off drinkers.
The unlicensed shebeens in Alexandra township provide a beer
for those returning from work, such as 31-year-old Amstel drinker Siphiwe
Dlamini, a part-time film industry worker.
"It's not busy today because it's Monday. People like
to take it easy on Monday, and, besides, the beer is not cheap. A lot of people
between now and the weekend drink homebrew beer. It's much cheaper," he
SABMiller's Bowman is hoping to woo homebrew drinkers with
its own beers made from local crops sorghum and cassava. Buyers not only get
consistent quality but a price tag that is a third less than mainstream beers.
Bowman plans to spend $400m to $500m a year for three to
five years to build two or three breweries a year and revamp others in Africa,
while he also increases production of its own "homebrewed"
sorghum-based cloudy chibuku beer.
Analysts estimate African beer volumes rose around 7% in
2011, but stripping out the mature South African market, which accounts for
over a quarter of the continent's beer, growth was well over 10%.
"Africa is likely to be one of the key long-term growth
drivers for the global beer category," said industry analyst Trevor
Stirling at brokers Bernstein Research.
Analysts say Africa's population growth of 2.4% a year
outpaces the 1% growth in Latin America and Asia, with Africa's 1 billion
population set to double by 2050.
Annual GDP growth of 5% is also a draw; the International
Monetary Fund forecasts that seven of the 10 fastest-growing economies through
2015 will be in Africa, with Ethiopia, Tanzania and Mozambique in the top five
after China and India.
With annual African per capita beer consumption only 8
litres, compared with a global average of 35 litres - stepping up to around 70
litres in Western Europe and North America - there is a huge pool of potential
to be tapped.
SABMiller, founded in 1895 to slake the thirst of gold
prospectors around Johannesburg, now brews 35% of the continent’s beer, with
its 90% of the South African market accounting for 60% of that volume.
Bowman's Africa region excludes South Africa and covers
eastern Africa from Mozambique to southern Sudan plus Nigeria and Ghana.
He is forecasting annual volume growth of 6-8%, helped by
sorghum beer Eagle, introduced in Uganda in 2004, and last year's first cassava
beer Impala in Mozambique.
Using local ingredients helps to make beer cheaper, and has
encouraged politicians to oblige with lower excise taxes for the finished
Africa's No 2 brewer Heineken brews 22% of its beer, with
more than half of that in Nigeria. Other big markets are the Democratic
Republic of Congo and Egypt, and it spent $163m on two Ethiopian brewers last
Amsterdam-based Heineken has a near-70% market share in
Nigeria, the continent's most populous nation and its second-biggest beer
market, and the West African nation is the group's second-most profitable
market worldwide after Mexico.
"The perfect combination of a young and fast-growing
population, developing middle class, strong GDP growth and improving political
stability makes Africa an exciting opportunity," said Africa and Middle
East chief Siep Hiemstra.
Fractionally behind is Paris-based Castel, also with a 22%
share. Angola and Cameroon account for half its volume. It has close links with
SABMiller, which is keen on a $10bn takeover of Castel's African operations.
SABMiller took a 20% stake in the French group's beer and
soft drinks interests in Africa, and Castel acquired a 38% share in SABMiller's
African subsidiary back in 2001.
Early this year they strengthened their links by agreeing
mutual pre-emptive rights over each others' beverage units in Africa.
Castel was founded in Bordeaux in 1949 by nine brothers and
sisters and is led by the octogenarian founding chairperson Pierre Castel. As
succession becomes an issue, analysts say SABMiller would love to do a deal to
merge their operations and give it control over 57% of Africa’s beer.
Diageo operates in Africa through its Guinness beer business
and spirits such as Johnnie Walker and Smirnoff. Around 70% of its African
business is in beer, with the bulk in Nigeria and East Africa.
It has 12% of the regional beer market and its annual growth
there is expected to rise above its current 15%.
"There is a rising tide in Africa driven by strong
economic fundamentals," said Nick Blazquez, head of Diageo Africa.
The group is spending to catch that tide.
Earlier this year it bought Ethiopia's Meta Abo Brewery for
$225m to give it number two position in a nation more populous than Germany.
If Ethiopians ever match German beer consumption, that will
make for quite a return on investment.