E-Malt. E-Malt.com News article: Kenya: Beer consumption to rise by at least 10% in the next five years as more Kenyans will be embracing bottled beer

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E-Malt.com News article: Kenya: Beer consumption to rise by at least 10% in the next five years as more Kenyans will be embracing bottled beer
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Beer consumption in Kenya is set to rise by at least 10 per cent in the next five years boosted by higher income and an increase in a youthful population, KDRTV reported on March 6.

An analysis by BMI Research firm on the industry trends also shows that more Kenyans will be willing to leave the traditional liquor market and embrace bottled beer as low cost brands bridge the gap.

The results released last week will be music to the ears of the brewers who have recorded declining sales in bottled beer in the wake of recent increases in taxation, which pushed up retail prices for the drinks.

“Rising incomes combined with a large young adult population (20-39 years) and increased adoption of affordable entry-level brands will see consumption accelerate over the years ahead. While high excise duties presents a downside risk to growth in mainstream and premium categories, favourable demographics and greater penetration of low-cost offerings will drive volume expansion for major brewers,” the analysis released last week said.

The research puts beer consumption in Kenya at an impressive annual growth rate of 10.5 per cent between 2017 and 2021. The growth now makes Kenya one of the countries with the greatest opportunities for growth and investment in the brewing business in sub-Saharan Africa. “On a per capita basis, consumption will grow at 7.2 per cent, reaching 38 litres by 2021,” the survey by the global research firm said.

The switch from home brewed alcoholic drinks to formal brands according to BMI Research is responsible for the projection of headline sales to grow at a faster rate than per capita consumption (average consumption per person).

Kenyans are also expected to record a rise in disposable incomes, with net income per household expected to increase from an estimated Sh181,300 in 2016 to Sh274,500 in 2021.

The country will also have 31 per cent of the targeted population by brewers falling between the ages 20 and 39, another opportunity to boost beer consumption in the age bracket with the young adult population projected to grow by an additional 1.8 million people in five years to hit 16.4 million.

East African Breweries recently recorded a drop in volumes of premium and mainstream bottled beer such as Tusker after an aggressive 43 per cent hike in excise duty, which came into effect in December 2015.

The excise tax hike is expected to weigh on sales of premium and mainstream beer over the short-to-medium term given that Kenyan consumers remain incredibly price-conscious according to the survey.

“However Senator Keg, which is dispensed from barrels and is taxed at a rate of Sh10 per litre rather than Sh100 represents a low-cost alternative and provides an important entry-point for low-income consumers,” BMI Research noted.


06 March, 2017

   
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