News

AFRICA: Beer to stay

10 March 2008 By db staff writer

d=”standfirst”>While sales of stout slump elsewhere, Africa offers strong growth for the dark ale, with Guinesss leading the way. By Euromonitor’s Catherine Mars

While stout sales slump in traditional markets such as Ireland and the UK where the beverage is seen as old-fashioned, the African market offers a glimmer of hope. In particular, the well-established Nigerian market is driving global sales growth supported by intensive marketing campaigns, new product development and a booming nightlife in urban areas such as Lagos.
Nigeria, the most populous country in Africa, accounted for 41% of global volume sales of stout in 2007, having overtaken the UK as the world’s leading stout market in 2006. Other key African markets for stout include South Africa, Cameroon and Kenya. In contrast to most other regions where stout is positioned as a niche premium product, most stout brands in Africa target the mass market and as such this is a low price, high volume category. This is partly due to the popularity of local stouts which are more affordably priced than Diageo’s premium-positioned Guinness. Although Guinness is the leading stout brand in Africa and the Middle East (with a 51% volume share in 2006), it is not as dominant as it tends to be in most other markets (in western Europe, for example, Diageo is responsible for almost 80% of stout volumes).
One of the reasons for the popularity of stout in Africa is its similarity to traditional African dark beer. In South Africa, stout is popular in lower-income areas and has a solid consumer base, particularly within the large Zulu population of KwaZulu-Natal, although sales have been declining somewhat year on year as consumers trade up to premium alcoholic beverages including lagers and whiskies. Despite this trend, Castle Milk Stout (SABMiller) had the fifth highest volume consumption across the beer category in South Africa in 2006.
While EU advertising rules ban any reference to alcohol being good for the health or the libido, in Africa the reputed aphrodisiacal qualities of beer have enhanced its popularity. In Nigeria, Guinness is associated with strength and sexual virility and is colloquially known as “black power” and “Viagra” after Pfizer’s virility drug, with this rather risqué positioning further cultivated by advertising campaigns. Despite costing twice as much as lager in Nigeria, approximately 46% of beer consumers in the country drink stout. In South Africa, Castle Milk Stout is also targeted at men. The brand runs an annual “Inkunz’ Emnyama” (black bull in Zulu) promotion aimed at helping consumers identify the person that has inspired them the most within their respective communities and then nominate that person as their “Inkunz’ Emnyama”.

Diageo dominates
Africa is an important market for Diageo, making up 33% of global Guinness sales. Guinness accounts for over 50% of volume sales of stout in the region and Nigeria is the third largest (and second most profitable) market for the brand worldwide. The company’s flagship stout brand in Africa, Guinness Foreign Extra Stout, has an ABV of 7.5% and is brewed in 28 locations around Africa.
Despite the dominance of Guinness, competition is intense. In Nigeria, Nigerian Breweries launched Gulder Max dark beer in 2006 in an attempt to attract stout drinkers. Similarly, in Cameroon, local players Brasseries du Cameroun and Union Camerounaise de Brasseries both entered the stout category in 2006. Brasseries du Cameroun’s Pelforth Extra Stout and Union Camerounaise de Brasseries’ Kadji Brune went on to capture 1% and 3% of stout volumes in 2006 respectively.
In the face of increased competition, Diageo is taking steps to safeguard its position. The company has invested in an aggressive “search for Guinness greatness” advertising campaign designed to appeal to cachet-seeking male drinkers across sub-Saharan Africa. In an effort to give the brand a more premium position prices have been raised, and in Nigeria Guinness Foreign Extra Stout has been launched in 300ml and 500ml cans. This launch is significant since domestic beer is mostly sold in glass bottles and cans are considered to be a more trendy and convenient option. These moves appear to have paid off, with Guinness sales across Africa up by 17% in the financial year to 30 June 2007.
Brand extensions have been launched to reach out to new consumer segments. In 2005 Guinness Extra Smooth, a uniquely smooth and easy-to-drink version of Guinness with 6% abv, was introduced in Nigeria in an effort to target younger lager drinkers and encourage them to switch to Guinness. The brand has been supported by an extensive marketing campaign featuring Tuface, a young and popular Nigerian music artist, in adverts via radio, television and billboards to give Extra Smooth a hip and youthful image. In Cameroon, Malta Guinness Quench, a non-alcoholic beverage, was launched in 2007 positioned as retaining the natural goodness of malt but combined with the more refreshing qualities of traditional carbonated soft drinks.
This type of product development may be crucial in maintaining sector growth. Africa will be a key growth region for stout over the mid to long term, driven by strong demand in Nigeria (30% growth by total volume 2007-2012) and Cameroon (44% volume growth over the same period). Despite the introduction of challenger brands, Guinness is expected to maintain its leadership position in these markets although new brand extensions may be required to bolster Guinness’s position in the future. It is possible that the brand will follow developments in other markets.
In Asia, for example, Euromonitor International has witnessed the launch of stout with added ginseng by players such as Carlsberg (Danish Royal Stout Ginseng in Malaysia) and Asia Pacific Breweries (ABC Extra Stout Ginseng in Singapore).