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Cape Town - As SABMiller [JSE:SAB] and Anheuser-Busch (AB) InBev raise their mugs to a potential new beer giant, micro-brewers like Soweto Gold are thinking about exporting in new markets in Africa.
The micro-brewer told CNN Marketplace Africa this week that this growing industry has seen exponential growth.
Soweto Gold founder Ndumiso Madlala, who gave up a successful career at SABMiller to join the craft beer revolution, told CNN: "There's quite a fierce competitive environment in the micro brewing space… what's amazing is that your craft beer drinkers are quite experimental and switch between us and other brands."
The industry is on the rise, said Madlala. "In the three financial years that we've had, we've seen an exponential growth from first to second year to the tune of 1500% and all the volume that we sold in the last financial year, we sold in first five months of the year," said Madlala.
Frothy fight for beer growth in Africa
However, the industry expects a frothy fight between beer makers trying to win over even the most discerning beer-drinking palates.
That’s after AB InBev agreed to buy SABMiller for £68bn (about R1.5trn) in October, raising its bid to clinch a record industry deal that brings one out of every three beers sold worldwide under a single company.
Chris Gilmour, an investment analyst for Barclays Africa, explains why the deal was so important for AB Inbev. “The one big missing piece - Africa - they had nothing here, so what do you do? Do you start from scratch,” he questioned. “No… you buy out the single best operator in Africa. AB InBev couldn't have done any better.”
SABMiller support crucial for micro brewers
SABMiller, which is available in 38 African countries and controls 90% of the South African beer market, has been supporting the craft beer market in South Africa and industry players are hoping this will continue.
The support has come through its long-time supply of malt to micro-breweries. "SABMiller has supported us for a long time, obviously with the new owners in town it will be interesting to see what happens," said Madlala.
Gilmour doesn’t believe the current situation will change. "Malt is in short supply,” he said. “SAB probably uses most of the malt in this country and it will sell on to smaller players. It's in their interest to keep up this relationship."
WATCH: CNN Marketplace Africa focus on brewery sector in South Africa
Take-over is good for craft beer
Some beer makers in Africa may view the SABMiller/AB Inbev deal as increased competition, but Wesley Whitehead, owner of Craft, a bar in Johannesburg, which gets 25% of their revenue from craft beer sales, sees it as an opportunity.
"If you look at what's happening in the states, you've got a good example of what will happen here,” he said. “We (at Craft) don't do any commercialised brands; no mass produced products at all: No SABMiller, no Amstel, no Heineken."
According to the Brewer’s Association in the US, craft beer sales in the US grew 18% in 2014 alone, and now accounts for 20% of total beer sales.
In contrast, the South African craft beer industry makes up less than 1% of the market with about 140 microbreweries, according to Standard Bank. Sales have risen since 2011 and the industry is expected to grow by 30% this year.
SABMiller still dominates the South African market and it comes down to affordability. When asked who is buying Soweto Gold, Madlala said: "Well it's a super-premium product, but it's targeted to the middle class.”
