- Title: VARIOUS: African beer keeps head as other markets go flat
- Date: 18th April 2009
- Summary: NAIVASHA, KENYA (FILE - 2008) (REUTERS) VARIOUS OF TECHNICIANS WORKING INSIDE BREWERY VARIOUS OF TECHNICIANS POURING BEER INTO MUG BEER SPILLING ON THE GROUND
- Embargoed: 3rd May 2009 13:00
- Topics: Light / Amusing / Unusual / Quirky
- Reuters ID: LVAD1HCPYPS814KHGXJJX23VUO9H
- Story Text: It's "happy hour" in Abidjan, Ivory Coast's commercial capital, and drinkers are trickling into the Marquis roadside bar, testament to the resilience of Africa's thirst for beer even in difficult places and tough times.
''I like the taste of beer. I like the feeling that beer provides, and that's it. I don't drink beer to get drunk, I drink beer to be with my friends. We've been here for two hours, just talking and no one is drunk. I think other drinks are too strong,'' says Thierry Lakpai, who lives in Abidjan.
Ivory Coast is the world's top cocoa grower, and analysts believe that cocoa consumption, often seen as one of the last comforts to go in a recession, could take a knock during the global economic downturn.
The International Monetary Fund has cut its 2009 economic growth forecast for sub-Saharan Africa to 2.2 percent from 5.1 percent six months ago, although that is still well ahead of the 3-percent-plus contraction expected in advanced economies.
Lower commodity export revenues and a slowdown in remittance income from workers overseas are squeezing disposable incomes and currency fluctuations are hurting some breweries, which mostly rely heavily on imported materials.
''Things are going slowly, we're no longer making the kind of profits we used to make in the past and we're not that big. It's because of the financial crisis," says Adama Attiobge, a storehouse manager for Ivory Coast's Solibra, a local beverage company.
Big brewers operating in Africa are also not dismissing the threat from the credit crisis that has caused economic havoc in other economic sectors around the continent. But while some brewers report a slowdown in sales growth, they say Africa still offers rich expansion prospects.
"We believe there's a significant amount of untapped potential.
Clearly we're in a financial crisis at the moment, globally, but if one takes an overall view, we believe that the momentum and opportunity in terms of beer, particularly, but beverages on general for Africa is positive. So, you know, we're selectively expanding and developing our businesses on the basis that we believe that over the short, medium and long term that there's significant potential for us," said Mark Bowman, Africa managing director of the world's number two brewer, SABMiller, told Reuters in Johannesburg.
The company is building four new plants in Africa, including Sudan's sole industrial brewery, and increasing capacity at existing plants to cater for double-digit volume growth across its beer and associated soft drinks businesses.
Nile Breweries, SABMiller's subsidiary in Uganda, will lose some of its export trade to the new brewery in southern Sudan, but is in the process of doubling its output over several years.
"I think the potential for growth in Africa is probably greater than on any of the other continents if you take into context the very low per capita consumption prevailing at the moment. The fact is that most Africans drink alcoholic beverages, but the poor Africans drink informal alcoholic beverages and as they become more affluent they will upgrade to branded alcoholic beverages," Nile's Managing Director Nick Jenkinson said.
Global brewers like Heineken, Diageo and SABMiller are in intense competition across a range of west and central African markets, sometimes in partnership with each other or with the French drinks group Castel, which has a large market share in much of francophone Africa.
Africa is credited with producing some of the earliest brewers in ancient times and Guinness was first shipped to Sierra Leone in the early 19th century. Yet the continent merits barely a footnote in most world beer guides.
Despite Africa's importance to some brewers -- SABMiller makes almost one-third of its profits there and the continent hosts four of the top 10 markets for Diageo's flagship Guinness stout -- per capita beer consumption of
5 litres a year is the lowest of any region except the mostly Muslim Middle East.
Higher consumption of nearer 60 litres per year in wealthier African countries such as South Africa and Gabon demonstrates the potential for growth as average incomes in Africa rise.
Brewers are also moving into the low-cost end of the market, hoping to pick up some of an informal alcohol market which SABMiller reckons could be worth three billion US dollars a year.
Experts say innovations in the industry include substituting local barley, sorghum and cassava for imported barley to make European-style lager more cheaply.
Brewers are also looking at using the local substitutes to produce more traditional cloudy brews to compete with local artisanal brews at 30 percent or more below average price of a lager, which is one US dollar.
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