Is Beer New Frontier in Africa?

In a recent report, “Beer on the New Frontier: Opportunities for Brewers in the African Continent,” Rabobank, the world’s largest agricultural bank, contends that Asia will soon be overtaken by Africa as the world’s fastest-growing beer market. And while Asia will continue to play an important role in the growth of global beer consumption, the report suggests that not only will Africa pass Asia in the amount of beer it drinks, the continent is ripe for large scale brewery operations pending significant work in infrastructure, storage, and transport.

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Why are Africans poised to drink so much more beer? One of the reasons is due to shifting demographics. Over the next five years, the number of consumers of legal drinking age will continue to increase across the world, particularly in developing markets where birth rates are high.

Everyone talks about the continent’s “youth bulge” but these youth are quickly becoming young adults of drinking age.

A second reason beer consumption is up is due to wealth increase: With African countries leading the pack of the world’s fastest-growing economies, more and more people reap the benefits of disposable income that can support buying beer.

According to report author Francois Sonneville, due to the relatively high price of beer, increases in wages in emerging markets will 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 United States (U.S.) it takes just 15 minutes. Any change in income in the U.S. is unlikely to lead to much change in beer purchases beyond trading up and spending slightly more money per beer.”

So what does this all mean for Africans on the continent and in the diaspora?

There is an unprecedented business opportunity in the brewing industry. While multinational firms in Europe and North America are grappling with the feasibility of breweries on the ground, tech savvy and connected entrepreneurs have the chance to get in early on the market and make some headway. Whether they ultimately begin large-scale home-grown beer brands or pave the way to partnerships with global players, there is much potential for a viable model to be seen.

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