Africa identified as new frontier for beer

In numerous reports to their investors the international alcohol producers point to emerging markets for their future profits. Now the Dutch Radobank has issued a report for investors claiming that rapid economic development, expanding populations and rising wages are set to propel Africa to being the fastest growing market for beer.

“Over the past few years, brewers from mature, stagnating beer markets have been investing in emerging markets,” explained Rabobank Analyst, Francois Sonneville. “The favourite destinations have been the BRICs [major economies in Brazil, Russia, India and China] 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.”

The report points to Africa having the largest increase in legal drinking age population, and increase in wages is expected. Increases in wages in emerging markets have a significantly greater effect on the spending pattern for beer than they do in mature markets. 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.

Despite the prospects for growth in Africa operating in the continent is not straightforward, and the report advises brewers to observe the many pitfalls the continent provides. Among these, the increasing alcohol problems expected to follow in the wake of increased consumption are not mentioned.

Says FORUT, Secretary  General, Morten Lønstad: “With economic development the resulting increase in alcohol consumption will inevitably lead to more harm from alcohol. The African countries will benefit from checking the rising influence from multinational alcohol producers by developing evidence based alcohol policies in order to minimise harm.”