Beer wars intensify as brewers see potential for huge growth across EA

A Keroche Industries brewery in Naivasha, Kenya. Brewers are betting on the region’s beer consumption increasing to that of the current global average. Photo/FILE 

By Paul Redfern

The huge potential for growth in beer sales across the East African region has seen leading manufacturers engage in increasingly competitive tactics in order to increase their market share.

In Africa, global giants like SABMiller, Diageo and Heineken are ploughing millions of dollars into marketing as they compete for the continent’s rapidly expanding drinks industry.

SABMiller executive chairman Graham Mackay told the Telegraph newspaper that he believed Africa was the most important growth story of the next decade.

“If you talk about the immediate runway for growth, I don’t think there’s anything that beats Africa,” said Mr Mackay.

The main beer manufacturers – Castel, SABMiller, Heineken and Diageo – have long associations with the continent, some going back well over 100 years.

Their marketing experts believe that over the next two decades Africa will be hit by a positive “perfect storm” of a booming population, above average GDP growth and riches generated by rapidly expanding mining and energy industries.

Moreover, at present, the average consumption of beer in Africa is low at eight litres per capita, compared with 35 litres in the rest of the world.

Trevor Stirling, an international drinks analyst estimates the industrial beer market in Africa was worth $10.9 billion in revenue in 2010.


However, around 75 per cent of the drinks market on the continent is still dominated by cheap home brews or illicit spirits.

Drinks companies believe many of these consumers will convert to commercially-produced lagers and spirits as they move up the wealth chain.

But the potential for growth has led to fierce rivalry between the drinks majors in East Africa, where a nine-year agreement between SABMillers’s TBL and Diageo’s East Africa Breweries was aborted last year.

Diageo then decided to go it alone in Tanzania by snapping up a 51 per cent stake in TBL’s main rival, Serengeti Breweries.

Diageo is currently ploughing billions of pounds into expansion in Africa at the behest of its chief executive, Paul Walsh, who wants half of the group’s revenues to come from emerging markets by 2014.

“We have invested about £1.5 billion in capacity expansion and acquiring new business in the past five years in Africa,” Diageo’s president for Africa, Nick Blazquez told the Telegraph