INTERVIEW-AB InBev looks to crack Africa's home-brew market with cheap beer

Thu Apr 13, 2017 5:16pm GMT

By Tiisetso Motsoeneng

JOHANNESBURG, April 13 (Reuters) - Anheuser Busch InBev will drive Africa sales with cheaper beer to lure drinkers who make their own brew, its new Africa head said on Thursday, capitalising on the continent's demographics that helped drive its takeover of SABMiller.

The world's largest brewer paid roughly $100 billion for rival SABMiller, giving it a big foothold in Africa and a crucial but tough task of cracking an untapped market of home brewed spirits that is believed to far exceed commercially produced alcohol.

"In many (African) countries people drink between 9 to 11 litres (of commercially produced beer) per person a year, so there's lots of room for growth," Ricardo Tadeu, AB InBev's new Africa head, told Reuters.

"We need to develop our mainstream beer, make it affordable enough to tap into the informal beer market, not only informal beer but informal alcohol in general that you have in those markets." The global average per capita beer consumption rate is 44 litres per year, according to Global Risk Insights.

AB Inbev's big rivals in Africa - Heineken and Diageo - have also launched lower-priced drinks, made with local ingredients, that are affordable for a wider swathe of the population.

Analysts have said the informal alcohol market is about four times the continent's more than $11 billion commercial market because home brews have a strong tradition rooted in centuries-old African rituals such as the home coming of a young man from initiation schools.

Despite an economic slowdown in most countries including South Africa and Nigeria, Africa's thirst for beer shows no signs of being sated. Analysts estimate the market will grow on average by 5 percent until 2020, faster than Asia's projected 3 percent.

According to U.N. statistics, Africa will also account for one-fifth of the global population by 2025 and the continent also has the largest working age population in the world.   Continued...

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