LEE’S SUMMIT, Missouri — Multiple organizations monitoring global markets are eyeing the African beer market as the future of beer production. Multinational beer companies like AB InBev are already thriving, but the microbrew market, where small breweries and home-brewers compete, is relatively separate. Due to the relatively high cost of microbrew beer, this market is courting a growing middle class of beer connoisseurs with disposable income. As access to modern infrastructure improves and with a burgeoning middle class across Africa, the demand for craft beer is also bringing competition from global giants of the industry.
Demographically, Africa is a major emerging market. It is projected that by 2025, one-fifth of the world’s population will be in Africa, coupled with the highest urbanization and GDP growth rates in the world. These demographics have enabled the African beer market to have the fastest predicted growth rate of any beer market in the world between 2015 and 2020. Market analytics magazine World Finance points out that as the middle class grows, craft beer could be the driver of the market, as a high-cost “status symbol”.
As with any new industry, the rise of a strong microbrew market brings with it many different opportunities, all of which stimulate the economy and build community. The most obvious of these is the sale of African craft beer in pubs and stores around the world and locally in African cities, where new pubs are opening to service the growing consumer base. Next, beer festivals could become annual attractions — already at least five such festivals have been established in South Africa alone. Events like these bring increased tourism, stimulating local economies with foreign capital. Finally, social organizations, such as beer clubs, could begin delivering custom-curated craft brews to members’ doorsteps.
According to the Brewers Association, an American trade organization, the craft beer industry contributed $55.7 billion to the U.S. economy in 2014 and employed more than 424,000 people. As African countries successfully work to lift people out of poverty, the growing consumer base on the continent will be a prime export destination for the U.S. craft beer industry too. Craft brewing could even stimulate local agriculture as brewers experiment with different types of grains, such as sorghum, to create unique, tasty brews.
The young industry is not without its hurdles, however, one of which is the operating costs imposed by conditions on the ground. Homebrewing is an option for a hobbyist, but even a boutique setup requires sanitation and energy production, two necessities which are sometimes hard to secure in Africa. Such considerations make operating even an average-sized brewery a capital-intensive endeavor, which limits the spread of microbreweries. Distribution is also a major concern for local breweries looking to expand beyond the city limits, as market centers are less common outside of urbanized areas. These conditions give foreign giants like AB InBev the competitive advantage to build advantageous relationships with brewers, distributors, wholesalers and politicians alike.
The appeal and possibilities of the African beer market are clear, and multinational beer companies are already capitalizing on it with a strategy called localization, acquiring local breweries to maintain relationships with communities and understand local distribution. According to World Finance magazine, “emerging local brands tend to do extremely well in local markets”. SABMiller, the second-largest producer in the market (native to South Africa), has recently come under the reigns of market giant AB InBev.
As the saying goes, the early bird gets the worm. With AB InBev ingraining itself in the African beer market through the acquisition of local breweries, the up-and-coming consumer base of middle-class Africans is likely to feed these big players and consolidate the market around their growing monopoly. The facts of capital notwithstanding, Africans have shown a preference for homebrewed beer or different alcoholic beverages entirely. Only time will tell if industry giants will consume this new African market, or if local microbreweries will take control, as seems to be happening in Europe and the U.S.
– Lucas Woodling