The African Food and Beverages Industry: The Shopping Revolution

By Jacobs, Sherelle | African Business, August-September 2012 | Go to article overview

The African Food and Beverages Industry: The Shopping Revolution


Jacobs, Sherelle, African Business


Perhaps the most visible manifestation of Africa's growth surge is the flood of branded and packaged edible products now sweeping the continent. A decade or so ago, only a small number of packaged items, mostly confectionery, cooking ingredients such as oils and margarine and well-known soft and alcoholic drinks were available from traditional retail outlets. South Africa, with its department stores, was the exception. Today shoppers are faced with a bewildering variety of products from all corners of the earth. Convenience stores, supermarkets and hypermarkets are replacing the humble 'duka' and the entire African shopping culture is being changed. But is this just the tip of the iceberg? Is the African food and beverages industry about to undergo its most profound transformation yet?

THE AFRICAN FOOD AND DRINK INDUStry is currently experiencing bullish growth, and prospects for further growth are excellent. "From a low base, Africa is going to become a much more important contributor to overall sales across a number of global food and drink companies over the next ID to 15 years," says Shonil Chande, a food and drink analyst at Business Monitor International (BMI), a leading information provider in country risk and industry research.

While the food and drink sector is not the only booming industry on the continent (one could say the same about the electronics consumer market or the construction industry), what is perhaps unique about the sector is that, generally speaking, growth is strikingly well distributed across the continent. Dynamism in the industry stretches from developed South Africa to emerging Democratic Republic of Congo; East Africa, Southern Africa and West and Central Africa are all experiencing positive trends in the food and beverages industry and are all posting upbeat growth outlooks for the future.

Statistics from a few African countries illustrate how well distributed the exciting outlook for the sector is. In East Africa, it is perhaps no surprise that in thriving Kenya, where the wealthy middle class is increasing in number, per capita food consumption is set to increase by 13% in 2012, according to BMI. In Tanzania, the growth is more spectacular, with per capita food consumption set to increase by as much as a fifth.

Moving westwards, in Nigeria, unsurprisingly for the continent's most populous country, the food and beverage sector is galloping along at a healthy pace. This trend is replicated in most of the stronger West African nations such as Ghana, Senegal and Cameroon. Even in Cote d'Ivoire, which has been through tough economic times due to political turmoil, the outlook for the industry has an upward curve: grocery retail growth is set to surge by 14%, according to BMI.

Down south, despite the fact that the market is much more mature, growth is still dynamic in South Africa. And fast-growing countries like Zambia and Angola are performing well; in Zambia, BMI predicts that retail

growth will surge by just under 25% this year. And in Angola, consumption of beer alone will increase by almost 16% in 2012.

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However, Chande at BMI does qualify generalisations about the distribution of growth by pointing out that activity in some places is more striking than in others. "There are stand-out regions and countries," he says. "Individually, Nigeria stands out in West Africa. Ghana and Angola are also very interesting. The East African Community bloc carries huge potential too. With a combined population of about i3om, Kenya, Tanzania and Uganda are going to provide some excellent opportunities going forward," he adds.

Nonetheless, Chande equally asserts that international firms are not necessarily restricting themselves to "obvious" markets. "Political risk is an important consideration too but some of the largest companies are happy to chase growth even where risks may seem high," he says. …

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