Food & Beverage

Heineken eyes booming African beer market


African drinkers are after "quality" over price when it comes to their beer, Heineken's boss for the region told CNBC, as the drinks giant targets the rapidly increasing market for alcohol.

Africa is set for huge growth in the beer space with a burgeoning middle class, an increasing number of people coming into the legal drinking age, and rising disposable incomes. But drinkers in the region are not after a cheap product.

"I think what it will be is an all-price offering. It's very important that you pick up…magic price points," Siep Hiemstra, president for Africa and the Middle East at Heineken, told CNBC in a TV interview.

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"You basically offer a beer at a price point people can afford and it definitely doesn't mean cheap beer. It means branded beer…Africans really love quality. You have to offer quality but at an affordable price."

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Between 2013 and 2018, Africa's economy is expected to grow at a 7.5 percent annual growth rate, while annual beer consumption will rise 6 percent, according to a note from Rabobank.

Heineken is targeting the region with a range of localized brands as well as the recognizable international brands. A fifth of the group's operating profit came from the Africa and Middle East region in 2013 underlining the significance of the region the company's bottom line.

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As beer volumes in the developed markets slowed during the financial crisis, brewers turned their attention to the emerging markets, according to analysts.

"Over the past few years, brewers from mature, stagnating beer markets have been investing in emerging markets," explained Francois Sonneville, food and agribusiness analyst at Rabobank said in a press release.

"The favourite destinations have been the BRICs (Brazil, Russia, India and China) and Asia, but as these countries mature growth rates are declining. Based on demographics and economic developments, we believe that Africa will be the continent to witness the fastest growth over the next five years."