Thursday, August 9, 2012

Kenya is the Third Largest Beer Market in Africa

Kenya ranks as Africa’s third largest alcohol consumer after South Africa and Nigeria; this is according to an analysis by Deutsch Bank Market Research.
The research that is based on international beer maker Diageo’s sales on the continent, placed Kenya’s alcohol market share at 17 percent of Africa’s total behind Nigeria with 36 percent and South Africa with 18 percent.  
“Beyond these two [South Africa and Nigeria] countries the continent’s alcohol market fragments quite quickly with only Angola, Kenya, Cameroon and Congo accounting for more than five percent of the total addressable market,” stated Deutsch Bank in the report.
With populations of 160 million, 50 million and 40 million, the three countries (Nigeria, South Africa, and Kenya respectively) have an expanding middle class, which is a key target for consumer goods companies such as alcohol makers.  
According to analysts, operating margins for Diageo in Kenya can go as high as 30 percent given its “quite premium pricing and the company’s scale in both beer and spirits.
Through its listed subsidiary East African Breweries Ltd (EABL), Diageo owns about 90 percent share of the formal Kenyan beer market and more than 50 percent of the local spirits market.
The report said the importance of the beer business is reflected in tax revenues with it contributing about 5 percent of Kenyan government revenues.
“This [fast growth] means that there is a rapidly growing middle class that consumer goods companies can target with around 60 million consumers having an income of over $3000 (Sh252000) a year and are expected to grow to 100 million by 2015,” the report stated, citing the Standard Bank research.
The report goes further to refer to Africa as “the next China,” being “probably the only region that could have as big an impact on the industry [consumer segment] as China has in more recent years.”

Adapted from Business Daily

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