Angola Food and Drink Report Q3 2012

BMI View: Angola has one of the strongest economic growth outlooks in Sub-Saharan Africa, and we are unsurprisingly bullish on the prospects for food, beverage and mass grocery retail sales growth in the country over our forecast period. The continued expansion of the domestic oil industry will be the chief driver of strong economic expansion, with investment in infrastructure (to support the development of the oil sector) also a major contributor. Oil- and export-led economic growth will feed into a positive outlook for private consumption over our forecast period, which translates into bright prospects for the consumer sector.
Key Forecasts .. Per capita food consumption, compound annual growth rate in local currency 2011- 2016: 13.8% .. Beer production growth in 2012: 15.9% year-on-year (y-o-y); compound annual growth rate to 2016: 12.7%.
.. Mass grocery retail sales growth in 2012: 19.8% y-o-y Key Trends Organised Retailing: All Southern Africa markets lag regional leader South Africa in terms of the presence of organised grocery retailing. Across the region, formalisation will be a key driver of mass grocery retail sales growth, as more and more shoppers trade up to organised retail channels. This will be true even for the region’s more mature markets; however, we also expect the steady introduction of new store offerings, such as non-food products, to help to support growth. In Angola, we estimate that only around 5% of grocery retail sales are accounted for by the organised sector; this provides tremendous room for growth.
Beverage Sector Growth: We expect to see strong beverage sales growth throughout the region over our forecast period to 2016 and beyond. There is enormous potential in beer and soft drinks, specifically carbonates, at this stage of the region’s development. Throughout the region the beer market is already keenly contested, and this level of competition will lead to significant new investment over our forecast period, driving strong sector growth. At an estimated 45 litres per annum, Angola already has a high beer consumption level and a relatively well-developed beer sector by regional standards.
Demographic Appeal: Demographics are a key component of the region’s appeal given the very low base from which most growth is occurring and the severe income inequalities that still persist. Angola’s population dynamics are a major positive for investors. The country’s already attractive 19.6mn-strong population base (as of 2011) will grow to 24.8mn by 2020 and by an enormous 109% on the 2011 level to 42.3mn in 2050. Most notable is the age profile of the population; in 2012, an expected 57% of Angola’s population will be younger than 20, and this provides immense long-term growth opportunities for regional investors.
Risk/Reward Ratings: Angola falls in an impressive third place out of 13 regional markets in BMI’s Food & Drink Risk/Reward Ratings for Sub-Saharan Africa. The country scores well above the regional average in terms of rewards – an illustration of the massive growth opportunities available in the region.
However, it also scores well below average in terms of risk, highlighting the challenge that investors face in fully realising this potential opportunity. Overall, Angola ranks comfortably above the Sub-Saharan average in our regional ratings.