Why Is Diageo Bullish On The African Beer Market?

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An emerging and thirsty middle class has made Africa one of the most lucrative markets for the beer industry. Furthermore, saturated beer markets across North America and Europe have resulted in breweries rushing to set themselves up in the rewarding, yet risky, markets in Africa.  A number of factors have made Diageo bullish on the African beer market. These include:

1) African Beer Growth Expected to Outperform Asia

  • Growth in the beer industry is expected to be driven by emerging African markets.

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2) Favorable Demographics To Aid Growth

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3) Premiumization Of Beer Consumption

  • While Africans drink nine liters of beer per head per year, the global average is 45.
  • The informal market, which poses a health risk to consumers, dwarfs the formal alcohol market, as it is considerably cheaper.
  • Growth in the future will be stimulated by consumers moving away from home-brewed to commercially-brewed beer.
  • Consumers’ perception of increased safety and reliability will help in this growth.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Diageo.

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