• The Growth Potential of Ghana’s Alcoholic Beverage Industry

    The African beer market is the fastest growing in the world. It is forecast to grow at an average rate of 5 percent between 2013 and 2017, according to a March 2015 report by market research group Canadean. Ghana’s beverage manufacturing sub sector is becoming very big, we forecast a tremendous amount of growth in the alcoholic beverage manufacturing sector.

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    Beer and Locally brewed Alcoholic Beverage Consumption Upsurge

    Ghana has become a key consumer of beer and a one of the largest beer consuming countries in the African beer market, and this is being accelerated by the growing economic momentum and a strong dynamism in the country’s formal sector. According to a research study, about 2 in 10 women consume alcoholic beverage in Ghana. 

    Despite the Ghana’s low per capita beer consumption by regional standards at 14.2 litres annually, this doesn’t show the true acceptance of beer. Initially, foreign beer producers had focused on the high end markets as well as middle class consumers and this gradually gave rise to local consumption. The likes of Kasapreko who had initially been an informal brewer have managed to formalize their business, hence intensifying competition between the local and Multinational beer companies. Increasing income levels of many Ghanaians has moved most local brewers to formalize their operations, with close to 50% of households expected to fall under the USD1,000 to USD5,000 bracket by 2020, up from 28% in 2015.

    Beer multinationals in Ghana now produce low cost beers for the domestic Ghanaian market, and are expanding rapidly to meet demand. SABMiller alone grew its market share to 48% up 20pp in 2010. Though growth forecast looks good, the developing local market is also improving its standards to compete effectively. Notwithstanding, SABMiller is well positioned to benefit from its AB Inbev acquisition. SAB is therefore likely to grow its market share in Ghana.

    According to BMI, beer volumes in Ghana will grow the fastest in sub-Saharan Africa region over the 2015-2020 forecast period, rising at an average rate of 14.5% y-o-y. Beer consumption in Ghana has been forecast to increase from 280.9 million litres in 2017 to 368.5 million litres by 2019. Beer consumption is also bound to increase from 16.0 per capita consumption in 2017 to 20.0 per capita consumption by 2019.

    The USD 100 million upgrade to Accra Brewery Limited's manufacturing facilities in 2015 for instance has doubled the production capacity of Accra Brewery Limited and signals a long-term commitment by SABMiller, and now AB InBev, to help boost operations in Ghana and the wider West Africa region.

    Opportunities abound and other local alcoholic beverage producers like Kasapreko acquired a $30 million bottling plant in 2012 and also commissioned a $70 million factory in 2015 too help expand its operations to East Africa are also growing from strength to strength. SAB Miller, through its local subsidiary, Accra Brewery Limited, continues to be a worthy competitor of Diageo’s Guinness Ghana Breweries Limited which posted revenue of US$ 70 million for the sale of alcoholic beverages alone in 2016.

    SABMiller’s huge access in Africa is believed to be the key driver and motivation for this merger between SAB Miller and AB InBev since SAB has a huge market in Africa. A deal of this size will make other companies sit up and take notice. The beer industry is ahead of the game when it comes to Africa. Hence, now is a particularly good time to make strategic investments in Ghana’s local beer sector given the upsurge in demand in Ghana and across Sub-Saharan Africa.

    Ghana is definitely one of the most profitable and high growth regions for the beer industry in the next decade.

    SABMiller and AB InBev merger deal will encourage other multinationals in consumer facing sectors to enter the African market more aggressively and Ghana is primed to be a strong target for multinationals looking at its long history of political and economic stability as well as its huge beer consumption market.

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