Food and Beverage industry in Africa
Africa has experienced good economic growth in recent years. The continent is home to 4 of the 10 fastest growing economies in the world. Ethiopia and Rwanda occupy the first two places worldwide. In addition, Côte d'Ivoire and Tanzania are two other African economies in the top 10.
The total value of the African food industry could rise to one trillion US dollars (approx. €841.5 billion) by 2030, according to the World Bank.
With a growing population, the demand for food and beverages will also continue to increase. Currently, about 1.3 billion people live in Africa. By 2050, this number is expected to increase to about 2.5 billion. In addition, the middle class is expected to grow. In 2013, the middle class consisted of about 376 million people and is expected to grow to about 582 million people by 2030.
The E-Commerce sector of the African food and beverage industry is expected to reach a turnover of approximately €1.15 billion in 2021. From 2021 to 2025, sales growth is expected to average 18.19%. The expected growth would lead to a market volume of approximately €2.38 billion in 2025.
Africa's food and beverage imports have been fluctuating in recent years (2016 approx. €69.74 billion; 2018 - approx. €54.61 billion), but are projected to increase to approx. €92.41 billion per year by 2025.
The African countries with the largest import volumes are Egypt, Algeria, South Africa, Morocco and Kenya, which together account for almost 50% of imports. Imports by smaller economies, however, are steadily increasing with economic and population growth. These include, for example, Côte d'Ivoire and Benin, whose imports increased even as those of the rest of the continent declined.
The main exporter of food and beverages is the EU, closely followed by Brazil and India. The list of countries from which Africa imports food and beverages includes 5 EU countries in the top 20 - France, the Netherlands, Spain, Germany and Italy - as well as Russia, Ukraine, the UK and Turkey.
Cereals (including rice, maize and wheat), edible oils, sugar and sugar confectionery, and animal products (dairy and meat) accounted for over 60% of Africa's total food imports at any given time.
Food and Beverage industry in South Africa
With its robust production capacity and advanced agricultural and agro-processing capabilities, South Africa is Africa's leading food and beverage industry market.
In 2018, the turnover of South African restaurants, cafes, takeaways, fast food outlets, caterers and other food services was approximately €4.28 billion, according to the government, and this is expected to increase to €5.48 billion by 2023.
According to a report by the EU, the total size of the South African food and beverage industry was approximately €46.7 billion in 2018.
The E-Commerce sector of the food and beverage industry is also on the rise. It had a market volume of approximately €84.89 million in 2020. In 2021, the E-Commerce sector is expected to grow by approximately 12.2%, which would result in a market volume of approximately €95.25 million.
Over the next few years from 2021 to 2025, the food and beverage e-commerce sector is expected to grow at an average annual rate of 7.66%.
South Africa's confectionery industry comprises the chocolate industry with a value of approximately €318.4 million and the sugar confectionery industry with a value of approximately €774.71 million. Imports in this segment have increased in recent years. The demand for sugar-free products, premium and artisanal chocolates is driving the growth of niche manufacturers.
South Africa is also the twelfth largest consumer of beer in the world. In 2018, the country consumed a total of approximately 34.47 hectolitres of beer. This accounts for more than 30%of the total formal African beer market.
Food and beverage industry in Nigeria
Nigeria's food and beverage industry is growing mainly due to the growing middle class and overall population growth. In 2019, Nigeria's population counted about 201 million people. It is predicted to double to about 402 million people by 2050.
Other growth factors include urbanisation, retail modernisation, infrastructure development and the advancement of advertising and marketing.
In 2019, in the retail sector (supermarkets, etc.) alone, food accounted for approximately 75% of turnover, at around €43.79 billion. The growth rate in food industry turnover averaged 9.2% per year between 2015 and 2019.
The Nigerian confectionery industry is estimated to be worth €28.2 billion in 2021 and is expected to grow at an average of about 5.08% annually until 2025.
The E-Commerce sector of the food and beverage industry is expected to increase by 31.5% to approximately €157.08 million in 2021. From 2021 to 2025, it is predicted to grow at an average annual rate of 11.6%. This would result in a sales volume of approximately €242.83 million in the E-Commerce segment of the food and beverage industry in 2025.
Food and beverage industry in Kenya
The growth of the food and beverage industry in Kenya is fuelled by a changing lifestyle of the population and increasing demand for processed and ready-to-eat foods.
In 2019, Kenya exported about €2.45 billion worth of food and beverages, while it imported about €2.04 billion worth of goods.
Kenya's sugar confectionery market was estimated at approximately €54.74 million in 2019 and is projected to grow at a compound annual growth rate of 8.7% from 2020 to 2025 to reach approximately €78.11 million in 2025.
The sector is growing strongly, especially in E-Commerce. In 2021, the E-Commerce sector of the food and beverage industry is expected to generate a turnover of approximately €24 million with a growth of 41.1%. Annual growth is expected to average 11% from 2021 to 2025. This growth would mean a turnover of approximately €36 million for the year 2025.
Opportunities for European companies - Example Germany
In 2019, German companies alone exported over €1 billion worth of food and beverages to Africa. Due to growing populations, rising incomes, urbanisation and the growing middle class, the demand for food and beverages in Africa will continue to increase. This will open up further export opportunities for German companies in the future.
German food and beverage exports to Africa increased by as much as 10.6% in 2020.
Take South Africa, for example: food and beverages account for the majority of the country's imports. Beverages, spirits, vinegar, sugar and residual foodstuffs in particular are imported. In 2019, the total value of these imports was approximately 42.23 billion rand (approximately €2.48 billion).
The demand for imports is increasing. Beer, cereals and poultry meat in particular are areas where demand for imports from all countries of origin is growing.
There are opportunities here to export products to South Africa. Especially on the B2B market and in E-Commerce, there are good sales opportunities. Opportunities for European companies exist in the export of dairy and meat products, cereals, confectionery, non-alcoholic beverages and beer, among others.
Conclusion
Africa's food and beverage industry is growing for several reasons. Even though the continent has a lot of potential for its own production, demand for imports is increasing in many countries. This can be explained, among other things, by the growing middle class. Especially the big markets like South Africa, Nigeria or Kenya offer exporters a lot of potential, but smaller markets are also developing and offer growth potential for European exporters.
German food exports to Africa are increasing annually. Especially cereals, dairy and meat products, confectionery, non-alcoholic beverages and beer represent export opportunities.
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