Namibia Food and Drink Report Q4 2012

Strong private consumption growth from an already reasonably high base (Namibia is one of the wealthiest countries in Sub-Saharan Africa) is behind our positive outlook for the food, beverage and retail sector in Namibia. We stress that the market does not enjoy the favourable population demographics of some of its regional neighbours, and we are forecasting fairly slow population growth.
However, rising incomes will support the continued development of the country’s consumer industries and is expected to result in greater investment in the market over our forecast period.

Key Forecasts

Total food consumption growth (local currency) in 2012: 9.4%. Compound annual growth rate to 2016: 9.6%.

Mass grocery retail sales compound annual growth rate to 2016: of 9.8%. 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 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 support growth. In Namibia, we estimate that around 38% of grocery retail sales are accounted for by the organised sector. This is comfortably ahead of most regional markets, although it does still allow room for solid 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 estimated 40mn litres per annum, Namibia 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. Namibia’s population dynamics – while not as enticing as many of its regional peers – are still a plus point for investors. The country’s strong population base, an estimated 2.3mn in 2011, will grow to 2.7mn by 2020 and by more than 50% on the 2011 level to 3.6mn in 2050. While this makes Namibia a lot smaller and slower-growing than most of its neighbours, the country does share similarly appealing age dynamics. In 2012, we forecast 47% of Namibia’s population to be younger than 20, and this provides solid long-term growth opportunities for regional investors.
Risk/Reward Ratings: Namibia falls in joint 11th place out of 13 regional markets that are ranked for Sub- Saharan Africa within BMI’s Food & Drink Risk/Reward Ratings. The country scores below the regional average in terms of rewards while scoring well above the regional average in terms of risk. Overall, Namibia ranks a little below the Sub-Saharan Africa average in our regional ratings.

Namibia Food and Drink Industry

Table of Contents

BMI Industry View 5
Business Environment 7
Sub-Saharan Africa Food & Drink Ratings 7
Macroeconomic Outlook ... 12
Industry Forecast ... 15
Food, Drink, Mass Grocery Retail 15
Food Consumption ... 15
Drink 16
Mass Grocery Retail 17
Market Overview . 19
Southern Africa: A Great Opportunity For Multinationals ... 19
SABMiller’s Sechaba Breweries: SSA’s Most Efficient Beer Company? .. 22
Demographic Outlook 28
Risk/Reward Ratings Methodology .. 32
Weighting .. 33
BMI Food & Drink Industry Glossary ... 34
Food & Drink ... 34
Mass Grocery Retail . 34
BMI Food & Drink Forecasting & Sourcing . 36
How We Generate Our Industry Forecasts ... 36