Growth in Africa: The opportunity beyond beer - Distell
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Forecasting the future
Growth in Africa:
The opportunity beyond beer
DECEMBER 2019
14|03|2017
I N T E R I M F I N A N C I A L R E S U LT S
Creating memorable moments.
A S AT 3 1 D E C E M B E R 2 0 1 8
Crafting a better future.
Our brands
Our top 15 brands generate 70,2% of total revenue and have recorded strong growth
Hunter’s Savanna Bernini Amarula Gordon’s Gin Klipdrift Richelieu
Scottish Leader Three Ships Viceroy 4th Street Autumn Harvest Drostdy-Hof Nederburg Original
Crackling Paarl Perlé
1 4 | 0 3 | 2OF
OUR REPERTOIRE 0 1 BRANDS:
7
Resonates with a broad spectrum of consumers with different taste profiles; plays across the price continuum; and
is enjoyed at mixed-gender drinking occasions worldwide.
WHERE WE OPERATE
14|03|2017
Africa macro dynamics
Key facts
Strong population growth
• Represents 16% of the world’s population but consumes 5% of the
• 1.3 billion people, growing to 2.5 billion world’s beverage alcohol
by 20501
• Ave alcohol consumption: 6l vs. 6.3l global average
• 2.4% p.a. growth in the short term2
• 65% of global population growth
• 19 years median age of population GDP 2018 ($bn) GDP growth ('18 - '23)
Mozambique 14
Rapid urbanisation Zambia 26
Zambia 1,5%
• Urban population to grow from 41% South Africa 2,1%
Kenya 88
Nigeria 2,6%
to 59% from 2015 - 2050 Angola 114
Mozambique 3,3%
South Africa 368
Improved (known) political stability Angola 4,0%
Nigeria 422 Kenya 5,7%
• Heavy election schedule in 2019/2020
• Rising number of democratic regimes Grocery spend 2018 ($bn) Population (mm)
Emerging middle class / consumer demand Algeria 31 Kenya 51
Angola 39 Tanzania 56
• 376 million to 582 million people from 2013 - 2030
South Africa 61 South Africa 57
Egypt 67 Egypt 97
Strong positive GDP outlook into the mid & long-term
Kenya 77
• 3.7% p.a. real growth long term2 Ethiopia 109
Nigeria 80
Nigeria 196
Source: UN World Population Prospects 2018; McKinsey Global Institute “Lions on the move – realizing the potential of Africa’s
economies; Deloitte – The Deloitte Consumer Review Act: A 21st Century view; Deloitte – African Powers of Retailing, New horizons for
Growth; Oxford Economics; EIU: Africa Trade Report 2018; International Trade Centre (ITC)
1 As compared to 2015 population. 2 2018 – 23 CAGR
African growth & share trends
KENYA
%Chg Volumes %Chg Volumes
NIGERIA
Region 2013 - 2018 2018 - 2023
56 Central America 32.4% 22.3%
40 48 48
Middle East 17.4% 16.7%
2 Africa 10.3% 12.0%
13 2
South America -4.5% 7.7%
Southern Europe 10.5% 6.7%
GHANA*
1
Nordic Countries 1.4% 6.6%
26 23 76 Central Europe and
Balkans 1.6% 5.5%
3 Caribbean 6.5% 4.1%
68 2
ANGOLA
Asia -8.2% 2.6%
TANZANIA
Australasia -0.1% 1.7%
30
North America 1.2% -0.8%
1 18 North West Europe -0.9% -1.2%
5
64 2 CIS -16.8% -6.4%
3 77
Eastern Europe and
Baltics -10.8% -20.6%
4 8 18
MOZAMBIQUE
* In mature developed markets beer 53 The total African alcoholic beverage market is
share of LAA drops down to average 58 9
30%-40%. Ghana is an exception, as 29 expected to grow by 12% in volume by 2023 –
bitters (traditional drink) is massive. 19 more than double Europe as well as other
NAMIBIA SOUTH AFRICA
Source: IWSR / Distell Source: IWSR developed markets in decline.
Addressable market sizes
South Africa’s has the 2nd largest addressable alcohol market after Nigeria. Despite its size and
attractiveness for investment, growth in household incomes and market size will lag the likes of Nigeria
CORE ADDRESSABLE POPULATION*
Country, Million, 2018, 2023
8
7
Investment Attractiveness Score
South Africa
8.9; (10.7) Ethiopia
Nigeria Kenya
6 Tanzania
1.8; (3.5) 0.40; (1.5)
17.8; (24.7) 1.2; (2.4)
1.8; (3.1) 1.5; (3.0)
Zambia Ghana Ivory Coast
5 0.45; (0.64)
1.8; (2.6)
Angola Mozambique
4 The core addressable Total
0.16; (0.48)
market is the alcohol Adult
consuming adult
Alcohol Consuming Adults
population excluding
the marginalised class Core Addressable Population
3
0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5
Household income growth (%), 2019-2023, constant local currency, 2005
6
*Core addressable population excludes population segment that are considered as marginalised ( Population that cannot afford branded goods on a regular basis). However, they may make infrequent purchases
Sources: CGIDD; WHO; Deloitte analysis, RMB
Spirits, wine and RTDs 50% of consumption but growing
ahead of beer
Most of the alcohol consumption growth in leading Africa markets will come from value & standard price segments, as the
informal/unrecorded segment declines – with premiumization being a strong longer term opportunity
ANGOLA ((MILLION LITRES
NIGERIA ((MILLION LITRES
5 YR 5 YR
ABSOLUTE ALCOHOL)
+2,4% CAGR CAGR
ABSOLUTE ALCOHOL)
+4,1%
99 186
90 6 0 2
3 Spirits 3.3% 158 15 Spirits 3.7%
11
RTDs 2.1% RTDs -0.1%
Spirits Wine Spirits Wine
Wine 1.1% Wine 2.7%
RTDs Beer RTDs Beer
Beer 1.6% Beer 3.1%
2019 Value Standard Premium 2023 2019 Value Standard Premium 2023
KEY DRIVERS
KENYA ((MILLION LITRES
5 YR
ABSOLUTE ALCOHOL)
+5,9% CAGR
71 Premiumisation: Shift from
2 1 informal to branded items
Spirits 6.2%
56 11
Rise of female consumers
RTDs 6%
Mixed gender occasions
Spirits Wine
RTDs Beer
Wine 4.9% Income growth broadens
repertoire beyond beer
Beer 2.8%
Beer share of alcohol can
2019 Value Standard Premium 2023 drop to 30%-40% as markets
Note: RTDs excludes Beer mature
Source: GlobalData, IWSR
Key consumer trends in Africa
As markets mature in Africa,
alcohol consumption is set to
01 Female consumption
•
•
To grow significantly with economic participation
Mature markets = 4 litres LAA per capita & 2 litres in low income countries
grow and expand in repertoires & • Cider/RTD’s trends growing whilst brands offering more options targeted at females
demographics
02 Premiumisation
• Per capita consumption increase & growth in value (60% higher in mature markets vs. low
income markets)
• Informal liquor decline as formalisation grows with branded goods
03 Consumer repertoire expanding beyond beer
•
•
Beer = 65% of absolute alcohol consumed in Africa – can reduce to 45% as markets mature
Wine: Key entry level category to win share from beer
• Whisky established as a category; showing good growth potential
04 Pack Size and Flavour options
• Beers moving to shared pack formats; RTD’s & FABs introducing more flavour options
Total Brand Experiences
05 •
•
Increased foreign competitor activity resulting in more personalised brand experiences
Local insight and brand investment driving choice
The female opportunity
Internationally:
• Females represent 85% of consumer buying decisions
• Considered the largest market opportunity in the world
• Controlling $20 trillion in annual consumer spending globally
• Expected to rise to $30 trillion within next 5 years
• Influencing drink choices of male counterparts through the consolidation of a
more unisex drinking culture
South Africa:
• 21-million female consumers expected in local market by 2025
• Will increase labour force participation
• Currently 9.5-million (2019) >> 11-million (by 2025)
• Increasing this segment’s spending power
• Strong bottle-serve culture, but making collective decisions on drinks
favouring vodka, gin, Cognac, cider, champagne and wine.
Females represent an exciting opportunity based on
unmet needs-SA segmentation example
Currently satisfied by Female-specific and mixed More potential exists to delight Distell’s approach to winning
traditional offers gender demand moments unmet needs with female consumers
OFF PREMISE, MIXED GENDER OCCASIONS
• Open to unique and
Close Connections Savour & Treat time unusual taste
experiences,
• Desire to explore &
Bold experiment.
Interpretations
Ciders/FABS
• Health & Wellness
Weekend Release
• Manifestations of
moderation offer
Mindful
Consumption
Spirits
ON PREMISE, FEMALE-SPECIFIC OCCASION Building meaningful Brand and marketing
connections in a hyper
offerings tapping into trends:
connected & digital world
amplifying premium - Engaging brand
credentials, purpose and propositions
Real brand story-telling
Connections - Tailored offerings
Wines
Girl’s Night OutSignificant opportunity for leading female empowerment
indicators to improve: SA vs. rest of Africa
• Bar religion & societal norms, the most important driver of future female consumption is financial freedom
• 1. Access to secondary education; 2. Being employed; and 3. Earning a good salary
LABOUR FORCE
GENDER INEQUALITY ESTIMATED EARNED ACCOUNT AT A FINANCIAL POPULATION WITH SECONDARY
PARTICIPATION
INDEX INCOME INSTITUTION EDUCATION**
20I7 20I5, ‘000 PPP$ 20I5
RATE* 2005-2015
2005-2015
United States 0.189 43.9 95.0% 55.7% 95.5%
Kenya 0.549 2.5 52.0% 62.4% 29.2%
Tanzania 0.537 2.3 17.0% 79.5% 11.9%
Ethiopia 0.502 1.3 21.0% 77.2% 11.2%
South Africa 0.389 9.1 69.0% 47.9% 74.2%
Angola N/A 5.1 22.0% 75.3% N/A
Nigeria N/A 4.4 34.0% 50.4% N/A
• In terms of gender inequality index, Kenya has an index score of 0.55 and is the highest of Distell’s African countries indicating a generally marginalized female workforce in terms of income
• The population of females with secondary education was 29.2% on average, and this is expected to continue to grow into the future indicating a growing base of informed female cohort that could
generate a market for Distell in the future once income levels and biases improve
*Include female population above age 15+
**Include female population above age 25+
Source: United Nations Development Programme (UNDP)Our Africa performance -June 2019 results
SOUTH AFRICA AFRICA (excl SA) KWA Holdings EA
incl BLNS excl BLNS
-0,9% +56%
+10,3% +28,6% Volume
Volume
Volume Volume
+47%
+9,5% Revenue
+20,0% +40,7%
Revenue Revenue Revenue • Growth driven by mainstream spirits and
wines led by Kibao, Hunters Choice, Cellar
Cider & RTD revenues up 11,5%
Cider & RTD Revenues up 15,6% Cask & 4th Street
• Led by Savanna, Extreme and Bernini
Spirit Revenues up 37,2% • Acquired property in Tatu City to double
• Successful Esprit launch
Wine Revenues up 11,3% local production capacity
Spirit Revenues up 11,6%
• Doubled revenue and tripled EBITDA since
• Strong double-digit growth from Vodka and • Exceptional double-digit volume and revenue acquisition
Gin led by Cruz, Old Buck and Gordon's growth across all key markets except Angola
• High single-digit Whisky growth led by and Namibia KES Jun-15 Jun-19
Bain's, Scottish Leader and Harrier • Growth in Spirits category led by Kibao, Volumes ('000 Li) 9,077 14,998
• Brandy under pressure due to pricing Hunters Choice & Best Whisky
Wine Revenues up 3,2% • 1 4led|by0 Savanna
RTD growth 3 | 2 0&1Hunter’s
7 Revenue 4,419,091 8,184,556
• Growth from Drostdy-Hof and Nederburg • Nigeria & Kenya additional local production EBITDA 261,394 1,013,136
• Volumes impacted by pricing (input costs) established; Angola & Ghana planned
EBITDA % 5.9% 12.4%
Margin improvement in all 3 categoriesInvesting behind an African manufacturing footprint
FUTURE DEVELOPMENTS
• SA: Northern Mega DC R1610m
• Africa: Angola & KWAL Tatu City CAPEX
• Mozambique & Zambia 2015 - 2019
SA CAPACITY BUILD
investigation 480m L/pa cider
70m L/pa BIB
60 m L/pa RB
50 m L/pa NRB
NIGERIA KENYA
ANGOLA
WADEVILLE
14|03|2017
NEDERBURG SPRINGSKey lessons from Africa
Local brands key
Building local RTM & customer affinity
Local Production vs. Export model
Africa not one continent
Prudent risk management is imperative
Measured capital allocation – not betting the farm
Local partnerships to ensure localisation & beneficiationYou can also read
