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Nigeria, Kenya, Ghana: Burgeoning Markets

CONTENTS
1. Middle Class Emerging
2. Beer
3. Wine
4. Spirits
KEY POINTS

Wine, beer, and spirits are growing segments of sub-Saharan Africa’s food and beverage industry, particularly in Ghana, Nigeria, Kenya, and South Africa. Despite relatively subdued economic growth due to COVID-19 and associated lockdown restrictions, continued momentum in the region’s alcoholic beverage market points to enormous potential.

The region’s emerging and informed middle class is helping create a burgeoning market for the wine, beer, and spirits industry. Consumer preference is shifting away from locally brewed beverages towards branded, imported, higher-quality alcoholic drinks. This emerging consumer group is also becoming more aspirational and brand conscious, paying closer attention to packaging and product details as opposed to focusing only on low pricing. This change in consumer behavior is reflected in shoppers’ preference for quality over quantity and their willingness to pay a premium for alcohol products that offer an authentic experience.

Other essential drivers of increased demand for wine, beer, and spirits in the region include population growth, an increasing number of expatriates, rising urbanization, a growing number of women drinkers, and expansion in the hospitality/tourism industry. Further, changes in social and cultural conditions together with increasing marketing efforts, are expected to support continued growth in consumption and sales of wine, beer, and spirits.

The EU: the top exporter

Beer is the most consumed alcoholic beverage in Ghana, Nigeria, Kenya, and South Africa. Domestic beers are the most consumed, however, domestic production has been influenced by an increasing number of international brands who are expanding their market presence through investments in local subsidiaries.

Despite the growing trend toward local brews, consumers, particularly in South Africa and Kenya, have an increasing desire for premium beer. The popularity of premium beer is especially strong among younger generations and the rising affluent class.

South Africa, despite its free trade agreement with the EU, has displayed a preference for U.S. beer.

Nigeria: the fasted growing market

South Africa is the largest wine market in sub-Saharan Africa by value, the majority of which is locally produced. Following behind are Kenya and Nigeria. Kenya is the fastest growing wine market, followed closely by Ghana and South Africa.

When it comes to wine imports, Nigeria’s imported wine sales grew at a faster pace (6% per annum) than total sales (1.4% per annum) between 2015 and 2019, making it not only the fastest growing market for imported wine but also the largest in sub-Saharan Africa. Global wine exports (in value terms) to Kenya grew at a CAGR of 5.7% and in South Africa 0.43%, while Ghana experienced a slight decline of 0.8% between 2015 and 2019. Nevertheless, projected future growth in total wine sales is promising thanks to the rising middle-income consumer base and changing tastes and preferences for premium wines.

While South Africa’s wine consumption is primarily from domestic production, in Ghana, Kenya, and Nigeria, consumption is entirely from imports. The EU is the major supplier of imported wine to the region, with 87% market share in South Africa, 84% in Ghana, 67% in Nigeria, and 29% in Kenya. In terms of U.S. wine exports to the region, Nigeria is the number one destination. Health consciousness is also on the rise and international imports of healthier low-calorie options are growing in popularity.

Ghana: the leading Spirits market

The market for spirits has witnessed significant growth over the past five years (2015 to 2019), recording a CAGR of 8.6% in Ghana, 15.9% in Kenya, 9.3% in South Africa, and 1.7% in Nigeria. These numbers point to a far more promising growth in total sales among all alcoholic beverages. Ghana leads the pack in terms of market size with total sales of $5.3 billion in 2019, while South Africa, Nigeria, and Kenya recorded sales of $4.1 billion, $1.8 billion, and $558 million, respectively.

Continuous expansion and penetration of international brands in domestic spirits production has led to the dominance of local supply in meeting demand. However, imports occupy a rapidly growing segment of the spirits’ market.

Middle- and upper-income consumers in Ghana, Kenya, and Nigeria are moving away from standard, local, unpackaged, artisanal spirits and seeking more exotic and imported premium brands such as Bourbon and other whiskey, tequila, vodka, flavored brandy, and cognac. For instance, whiskey-based cocktails are becoming an aspirational symbol of affluence in lounges across Lagos, Nigeria. Consumers there demonstrate a preference for sophisticated and imported spirits.

Key Points
  • The emerging and informed middle class is becoming more aspirational and brand conscious
  • Beer is the most consumed alcoholic beverage
  • In South Africa and Kenya, have an increasing desire for premium beer
  • Kenya is the fastest growing wine market, followed closely by Ghana
  • The EU is the major supplier of imported wine to the region
  • For spirits, Ghana leads the pack in terms of market size
  • Consumers demonstrate a preference for sophisticated and imported spirits.