Global breweries love Africa

Global breweries are increasingly investing in the African continent. Beer making is big business around the world, and never more so than in Africa. Not with reference to consumption only. The world’s leading alcohol businesses are setting up shop on African soil at an increasing rate, ploughing hundreds of millions of dollars into the industry each year.

By Craig Falck for Africa Report
Photograph: © Evgeniy Lankin | Dreamstime.com

One of the biggest contributing factors in attracting these global drinking giants is the availability of resources. There’s land, there are the crops for the grain used in the brewing process, and there’s cheaper labour. These are just three of the biggest enticements that are pulling the alcohol manufactures to Africa because they make it easier for these multinational enterprises to build up their brand and set up their production facilities than it would be in their own markets. Add the very friendly exchange rates ,it probably costs a fraction to build a brewing plant and train employees in Africa than anywhere overseas.

There’s also the favourable element of Africa having a growing economy that seems inviting to these businesses. While Africa has been set back by the global recession over the last four or five years, it hasn’t been affected nearly as badly as the rest of the world. This means that it has managed to grow, although at a slow pace, instead of retrogressing like so many other economies. This offers a window of opportunity to international investors, as there is some form of stability in the African economy as a whole instead of the instability that they experience in their own. This gives them a strong platform to build on through investment, and that is exactly what the alcohol-processing businesses are doing. The stability means they will be able to predict the market’s reactions for sometime and not worry about it turning on its head overnight.

Another reason why Africa is a hot spot for their investment is because Africa, for all its size, is very centrally located as a destination and a source of departure. This makes it easy for raw materials to be shipped to the brewing plants in Africa and for products to be shipped out to their destinations around the world. Add to it the travel options (land, sea and air), and Africa seems like the perfect place to do business for these large multinational breweries. And then there’s also the local market for alcohol consumption, which reduces the transport costs tremendously.

As a whole, Africa provides tremendous investment and business opportunities to the world, and so far international breweries are one of those businesses leading the race.