Demographic Trends Will Fuel Alcohol Market In Africa

The potential for growth in alcoholic drinks sales across many African countries is well known. Using BMI's demographic and macroeconomic forecasts, we highlight below some of the African countries that could experience the strongest growth in the alcoholic drinks market. In our view, there are three key trends that will affect the alcoholic drinks industry on the continent in the future: growth of the 18+ population, growth of the urban population and per capita income growth.

As is shown by the charts below, the African alcohol drinks industry has massive potential. Listed multinational alcoholic beverage firms SABMiller, Diageo and Heineken are the three best-established companies in the continent. These three, along with privately owned French firm Castel, operate in a number of African countries through subsidiaries. Together they have significant exposure to the continent; however, there remain countries with great prospects that are as yet untapped.

One such example is Niger. The country has not seen multinational interest from the major beer companies but is forecast to achieve phenomenal demographic growth. Just one major brewery exists in Niger: Société des Brasseries et Boissons Gazeuses du Niger, which has an annual production capacity of 78,000 hectolitres.

Significant Opportunity From Demographic Trends
Select African Countries - Forecast % Change In 18+ Population, 2013-2030 (LHS) & 2013-2050 (RHS)

The potential for growth in alcoholic drinks sales across many African countries is well known. Using BMI's demographic and macroeconomic forecasts, we highlight below some of the African countries that could experience the strongest growth in the alcoholic drinks market. In our view, there are three key trends that will affect the alcoholic drinks industry on the continent in the future: growth of the 18+ population, growth of the urban population and per capita income growth.

As is shown by the charts below, the African alcohol drinks industry has massive potential. Listed multinational alcoholic beverage firms SABMiller, Diageo and Heineken are the three best-established companies in the continent. These three, along with privately owned French firm Castel, operate in a number of African countries through subsidiaries. Together they have significant exposure to the continent; however, there remain countries with great prospects that are as yet untapped.

One such example is Niger. The country has not seen multinational interest from the major beer companies but is forecast to achieve phenomenal demographic growth. Just one major brewery exists in Niger: Société des Brasseries et Boissons Gazeuses du Niger, which has an annual production capacity of 78,000 hectolitres.

The two charts below show forecast population growth in the 18+ segment in selected African countries. The legal drinking age across most African countries is 18; as such, countries towards the left-hand side of these charts demonstrate the greatest potential to see increases in alcohol consumption growth.

Significant Opportunity From Demographic Trends
Select African Countries - Forecast % Change In 18+ Population, 2013-2030 (LHS) & 2013-2050 (RHS)

We believe that Niger will also experience the greatest increase in its urban population over the next few decades. A growing urban population has both direct and indirect benefits for consumer goods companies. Consumers in built-up areas are likely to have greater disposable incomes than their rural counterparts, as well as greater exposure to packaged foods via better mass grocery retail networks. Indirectly, such areas are also more likely to have better infrastructure - both in terms of delivery and at the point of sale.

Rising Urbanisation, Too
Select African Countries - Forecast % Change In Urban Population, 2013-2030

In addition to the overall industry increasing in scale, forecast per capita income growth in much of Africa will drive individual sales of alcoholic drinks and packaged foods. By this metric, many African countries will be among the fastest growers in the world.

Selected African Countries - Annual GDP Per Capita Growth
Country Indicator 2012e 2013e 2014f 2015f 2016f 2017f 2018f 2019f 2020f 2021f 2022f 2023f
National Sources/BMI

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Angola GDP per capita, AOA, % y-o-y 12.7 7.5 13.1 12.9 11.2 10.6 9.8 11.5 11.5 11.3 10.7 11.2
Botswana GDP per capita, BWP, % y-o-y -0.6 9.5 8.8 9.8 8.4 10.4 10.7 10.0 10.2 9.9 9.9 9.8
Congo (DRC) GDP per capita, CDF, % y-o-y 14.1 25.0 26.9 25.7 23.4 22.3 21.6 20.9 20.5 20.1 19.8 19.6
Côte dIvoire GDP per capita, XOF, % y-o-y 7.2 10.5 10.0 11.3 9.7 10.0 10.4 10.1 14.9 9.9 10.2 9.9
Cameroon GDP per capita, XAF, % y-o-y -7.1 10.6 8.1 6.4 3.0 5.3 5.2 5.2 5.2 5.3 5.3 5.3
Ethiopia GDP per capita, ETB, % y-o-y 41.8 -0.6 12.4 12.5 12.8 12.5 12.7 12.7 13.3 13.3 13.4 13.5
Ghana GDP per capita, GHS, % y-o-y 20.3 3.1 26.0 19.9 16.6 14.2 12.3 12.3 12.4 12.4 12.5 12.5
Kenya GDP per capita, KES, % y-o-y 9.8 6.1 10.5 10.2 10.7 10.9 10.6 10.7 10.7 10.7 10.7 10.7
Mali GDP per capita, XOF, % y-o-y 1.2 4.7 6.7 6.8 6.0 5.6 5.5 5.6 5.6 5.7 5.7 5.8
Mozambique GDP per capita, MZM, % y-o-y 11.5 11.0 11.3 14.1 15.1 14.8 13.5 13.3 18.8 15.8 11.3 9.8
Niger GDP per capita, XOF, % y-o-y 9.5 5.4 4.8 4.8 5.5 5.6 5.7 5.7 5.8 5.9 6.0 6.1
Nigeria GDP per capita, NGN, % y-o-y 5.3 2.3 9.4 10.5 13.3 12.6 12.5 12.3 12.2 12.0 12.0 12.5
Senegal GDP per capita, XOF, % y-o-y 2.7 2.8 3.4 3.9 4.4 4.4 4.6 4.7 9.6 5.6 5.6 5.6
Uganda GDP per capita, UGX, % y-o-y 12.0 7.6 9.7 10.0 10.2 12.4 12.9 11.6 10.8 10.7 10.2 9.7
South Africa GDP per capita, ZAR, % y-o-y 6.1 7.1 7.3 8.5 7.9 7.6 7.7 7.8 7.7 7.7 7.8 7.6
Zambia GDP per capita, ZMW, % y-o-y 17.6 6.2 14.5 9.3 8.2 7.3 8.9 8.8 8.8 8.8 8.8 8.8

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