24th March, 2014 by Lauren Eads
Rapid economic development, growing populations and rising wages will propel Africa to become the world’s next fastest growing market for beer, according to a new report by Rabobank.
In its latest report, Beer on the Frontier: Opportunities for Brewers in the African Continent, Rabobank analysts said Africa is expected to see the largest increase in the legal drinking age population between 2013 and 2018, as birth rate in Latin America and Asia is due to slow.
At the same time, in Western Europe and North America, beer sales have declined by between 5 and 10% since 1998 leading to “diseconomies of scale and overcapacity for many local brewers”.
The consumption of beer per capita is also set to increase globally, with GDP levels expected to rise across the globe as mature markets emerge from recession.
This effect, analysts have said, will be particularly significant in Africa given its population’s limited disposable incomes and the relatively high price of beer.
The report said that an increase in wages in emerging markets such as Africa will have a significantly greater effect on spending patterns for beer than in mature markets, such as the US.
For example, in Tanzania, it takes the average worker just over five hours of labour to earn a beer, while in the US it takes just 15 minutes.
Any change in income in the US is unlikely to lead to change in beer purchases beyond trading up and spending more money per beer, the report said.
Rabobank Analyst, Francois Sonneville said: “Over the past few years, brewers from mature, stagnating beer markets have been investing in emerging markets.
“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.”
Earlier this year SABMiller announced plans to invest £110 million to triple production at its brewery in Nigeria.