Africa’s favorable demographics and growing middle class are opening up intriguing potential for the beverage alcohol industry, but the region’s economic constraints have put a renewed focus on reasonable prices.
“Population growth has been the driving force behind the consistently rising trend of alcohol consumption in Africa,” says Russell Menezes, Research Director and Middle East & Africa at IWSR. Because of this, there has been a significant increase in the number of urban regions as younger LDA demographics have moved to larger cities, increasing demand for and accessibility to alcoholic beverages.
“A young, active middle class has largely shaped current trends and socioeconomic changes like better job opportunities and higher education are driving an increase in the percentage of women who drink.”
Premium wines and spirits are gradually growing in popularity as more affluent consumers in South Africa, Nigeria and Kenya value social status and image and are affected by global trends.
Meanwhile, prospects for basic and low-priced products have increased due to economic pressures. According to Menezes, “there is a growing preference for reasonably priced alcoholic beverages that provide both enjoyment and cost-effectiveness as people face financial challenges and uncertainties.”
The existence of both domestic and foreign alcohol producers affects how competitive the market is. Due to the fact that making alcohol locally is more economical than exporting it from a central place, multinational corporations have begun to do so. Shorter lead times are the outcome of this strategy, which also enables businesses to customize their goods to suit regional tastes and preferences. It is anticipated that Heineken’s acquisition of Distell and Namibian Breweries in April 2023 their result in more investment in African markets as well as a stronger emphasis from the combined business.
Local whiskies are very popular and in 2022, rum saw double-digit increases in both Nigeria and Ivory Coast as young adult women began to favour inexpensive, sweet-flavored beverages like spiced rum and Indian café rum. Whisky, accounting for almost 50% of the region’s spirits sector, is followed by brandy and gin/Cognac, whose sales increased by 17% in 2022.
The three biggest beer volume markets in the region are Ethiopia, Nigeria and South Africa. Beer volumes in South Africa increased by 13% in 2022, while growth is expected to slow down. Standard and foreign brands are leading the way in the premium lager market.
The consumption of lager is predicted to increase steadily in a number of other nations in the next years, including Nigeria, Ethiopia, Cameroon and the Democratic Republic of the Congo.
In recent years, still wine has grown significantly, gaining popularity among the growing middle class, especially in the value and low-cost segments. Important factors include the expansion of large liquor store chains into both rural and urban regions, the rise in female alcohol consumption, and the emergence of new wine drinkers looking for sweeter selections.
In South Africa, boxed wine is becoming increasingly popular as high-end goods increase their legitimacy. Portuguese wine continues to rule in Angola, while the strong francophone background of the Ivory Coast contributes to the need for inexpensive, locally bottled wine, typically in boxed containers. Growth is anticipated in both nations in the upcoming years.
“Affordable sparkling wine products targeting the continent’s emerging middle class present a strong opportunity, even though Champagne and other sparkling wines are still highly sought-after by aspirational, status-conscious African consumers,” stated by Mr. Menezes.
While specific markets may offer different growth opportunities, there are some general trends that are evident throughout the region, including the growing power of female consumers and their preferences, the rise in demand for the standard & below segment and the desire for more variety and innovative flavours, particularly those based on fruits.
It is recommended that brand owners consider incorporating a more inclusive marketing strategy for female drinkers. This might involve challenging conventional beliefs and increasing awareness of mixed-gender drinking. It’ll also be crucial to concentrate on premium+ opportunities.
