LONDON, United Kingdom – Beer consumption is slowing in Western Europe and the United States. As a result, global beverage companies are beginning to compete for market share in the fast growing African beer market, which is supported by the rise of the continent’s middle classes.
SABMiller, the second largest brewer in the world and maker of beers including Peroni and Miller Lite, is hoping to tap into this fast-growing new market by selling Chibuku, a commercial alternative to a traditional, home-brewed drink called Brukutu. This beverage differs from traditional, clear beers in that it is a thick, milky looking beverage whose ingredients tend to separate. It is sold in cardboard cartons and needs to be shaken before drinking, hence its nickname “Shake-Shake.”
The appeal of Chibuku is that it captures the flavor of home-brewed Brukutu but is more affordable and produced in more hygienic conditions. Indeed, SABMiller is hoping to capture lower-income Africans who are used to drinking informal home brews with Chibuku, which costs up to 40% less than mainstream beer brands. As the incomes of these consumers continue to rise, there is potential for them to “trade-up” and start drinking some of the company’s other, more expensive products.
SABMiller is investing heavily in Africa, spending $260 million there this year. It plans to expand its sales of Chibuku, which is currently well-established in Botswana, Malawi and Zambia, to 12 African countries within the next three years. SABMiller forecasts that the market for home-brew type beers in Africa could be worth $3 billion per year and it is estimated that the informal beer sector in Africa is up to four times larger than that for traditional, clear beers.
Other beverage companies are following SABMiller’s example and investing in the growing African beer market. Diageo, which makes Smirnoff vodka and Johnnie Walker scotch, recently spent $225 million to buy a brewery in Ethiopia, and last year, Heineken bought five breweries in Nigeria and two in Ethiopia.
– Caroline Poterio Martinez