African beer market heats up as industry giants fight for supremacy
With the rise in beer consumption, brewery giants are locked in a fierce battle for a share of the booming African beer market. Joseph Ekeng writes.
The African beer market is heating up, with global beer giants Heineken, AB InBev, and Diageo competing for dominance in a market valued at $26 billion. The market is expected to grow at an annual rate of 4.3% between 2021 and 2026, driven by increasing population, rising disposable income, and changing consumer preferences.
AB InBev made a record acquisition of South African beer giant SABMiller in 2015, giving the company a strong foothold in the South African market and other markets in the region. Heineken, the second largest beer company globally, recently acquired competitor Distell in a move to create a “regional beverage champion” and prepare for a fight with its competitors.
The Rise of Beer Consumption in Africa
The rise in beer consumption across Africa is one of the significant factors driving the growth of beer makers in the region. The beer segment’s revenue is expected to grow annually by 6.16% (CAGR 2023-2027), amounting to US$29.41bn in 2023. Currently, AB InBev dominates the South African market, with a market share estimated at 20% to 25%. However, Heineken’s Distell deal could allow the brewer to take over 33% of the market in a few years.
Why Companies are Fighting for a Slice of the African Market
Several strategic reasons are driving global beer giants to fight for a slice of the African market. Firstly, Africa’s population is expected to double by 2050, meaning that the beer market is likely to grow at an even faster rate. Secondly, the African consumer market is becoming increasingly sophisticated, with a growing demand for premium beers. Thirdly, the African market is largely untapped, with only a few large beer companies dominating the market. Fourthly, the African beer market is relatively less regulated compared to other regions, providing an opportunity for companies to experiment with new beer flavors and innovative marketing campaigns.
The African Market: One of the Few Remaining Frontiers for Growth
Dr. Edward Sebuufu, a researcher at the Economic Policy Research Centre in Uganda, explains that “the African market is currently seen as one of the few remaining frontiers for growth in the global beer market.” The region’s large and growing population, expanding middle class, and rising incomes all provide a promising market for beer makers. Additionally, African countries have relatively low levels of beer consumption per capita, presenting an opportunity for growth.
The Battle for Dominance Continues
Heineken’s acquisition of Distell is a significant move in this battle, but it remains to be seen whether it will allow the brewer to overtake AB InBev as the dominant player in the South African market. One thing is clear: the African beer market is poised for significant growth in the coming years, making it a battleground that no beer giant can afford to ignore.
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