It takes the average American 15 minutes of work to earn enough money for a beer. In Tanzania, it takes about five hours.
But this won't always be the case: Economies on the African continent are expected to grow at a breakneck pace in the next few years as vast swaths of the population become old enough to work … and drink.
While the U.S. and Western European markets are still hung over from the financial crisis, the world’s brewers are looking at Africa as the next beer frontier.
According to a report issued Monday by Rabobank, a Dutch financial services company, the African beer market is set to grow very fast very soon, and companies would be wise to take notice.
“Over the past few years, brewers from mature, stagnating beer markets have been investing in emerging markets,” said Francoise Sonneville, a Rabobank analyst, in a Monday press release.
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“Based on demographics and economic developments, we believe that Africa will be the continent to witness the fastest growth over the next five years,” he added.
The median age in Africa is just 20 years. Its potential labor force is expected to surpass 1.1 billion -- higher than forecasts for India and even China -- and it’s likely that members of this cohort will be better able to afford a few beers after work than their predecessors.
“Increases in wages in emerging markets have had a significantly greater effect on the spending pattern for beer than they do in mature markets,” the Rabobank report notes.
All this comes just as Western markets are getting sluggish. In 2013, 2.79 billion cases of beer were sold in the U.S., a decline from 2.9 billion five years ago. In the early 1990s, more than 70 percent of drinkers in their 20s would choose beer. Today, it’s more like 40 percent.
And big companies have taken notice. In January SABMiller PLC (LON:SAB), a London-listed brewer that operates in 37 African countries, invested $100 million in a Nigerian subsidiary. Heineken NV (AMS:HEIA), the world’s third-largest brewer, announced plans to build a $156 million plant in Ethiopia, the largest in the country.
But American heavyweights Anheuser Busch Inbev SA (EBR:ABI) and Carlsberg A/S (CPH:CARL-A) may be missing the happy hour.
“SAB has a lot of emerging-market assets, and in particular, in areas where AB InBev doesn’t necessarily have too much influence,” said Bryan Keane, a money manager at Alpine Woods, according to Bloomberg. “Right now, AB InBev does not have a lot of business in Africa and SAB is a large player there.”