Imara African Cement Report Africa, the last cement frontier Angola ...

Breweries and Beverages Sector – A thirsty lot
The booming beverages sector opens up to new players
Angola has the third largest domestic market for alcoholic beverages in sub-Saharan Africa after South Africa and
Nigeria, yet despite this it still has significant growth potential. Nigeria, which is second only to South Africa, has
immense potential, however, installed capacity is currently meeting demand. Angola‟s market is undersupplied, and
the dominant duopoly brewer, Cuca, has grown exponentially in the six years since privatisation. With stabilization
and growing domestic demand, the beverages sector is opening up. In 2010 SABMiller opened a new US$135m
brewery and soft drinks plant in Luanda and their Castle and N’gola brands are gaining traction. Portugal‟s Unicer is
still being held at bay, however, through imports they supply the bulk of the country‟s production deficit. Angola‟s
higher than average per capita consumption, at over 59 litres per capita per annum Angola has one of the highest per
capita consumption levels in Africa, only surpassed by Botswana, Namibia and South Africa. Bear in mind that Angola
is virtually a cash economy with a still underdeveloped consumer credit industry. Consequently, domestic
consumption is funded by disposable cash flows, which indicates a large and growing middle class. The strong beer
consumption statistics are also indicative of the long established Lusophone cultural influence.
A bullish outlook for consumer industries is supported by a bottom heavy population distribution where an estimated
43% of the population is under 14 years of age, with over 60% of Angolans living in urban areas. The re-emergence of
the agricultural sector, together with rising employment and continued expansion of the non-oil economy buttresses a
strong case for Angola‟s beverage sector.
In 2010 SABMiller and Unicer entered the fray, and the breweries they are building will boost installed lager capacity
to somewhere in the region of 7.5 m HL, however, compared to current demand of 8.9m hl. We use regional proxies
as an approximation of size, and would approximate a minimum value for Cuca in the region of US$ 2.4bn (EV/hl of
US$395). Having higher growth potential than most other SSA countries, we would not be against using Nigerian
Breweries as a specific peer, in which case a ball park valuation, factoring in strong growth characteristics, would be
in the region of US$2.6bn (EV/hl of US$432). The details are provided per table 11.
Companhia União de Cervejas de Angola (CUCA): Living up to the nickname ‘Ferrari’
Cuca is Angola‟s largest beer and beverages manufacturer, boasting a 68% share of the local beer market, distributed
country wide under the brands Cuca, Nokal and Eka. The company is owned by the French beverages giant Group BGI
(Castel), who have a partnership with the MPLA‟s financial investment company, GEFI.
The group consists of 7 factories and 4 000 employees; in 2002 the Cuca factory in Luanda was privatized, then in
2003 the Nokal (Luanda) brewery was acquired, quickly followed by the acquisition of Eka (in Dondo – Cuanza Norte)
in the same year. In 2004 the Soba brewery in Catumbela was opened in the Benguela province that started
production with an installed capacity of 600 000 HL per year. In 2005, yet another brewery was opened in the
Cabinda province, and the latest development was the construction of a new plant called Cobeje (Bom Jesus in
Bengo), which started production in under five months. In less than a year, the brewery‟s production reached 1,3m
HL per year, taking the total group capacity to 6m HL.
The biggest constraint for the brewery sector is the sourcing of raw materials which are mostly imported. The
resuscitation of the agricultural sector will, with time, improve local availability of raw materials.
SABMiller: Enter the big guns
SABMiller, the world‟s second largest brewer, is growing their presence in Angola from scratch and their operational
presence and activities have been stepped up considerably. SABMiller invested in a new brewery increasing capacity
to 1m HL and in their 2011 annual report they reported that lager volumes had increased by 26% following the
successful commissioning of the new Luanda plant. The group is currently operating in both the CSD bottling and
beer brewing markets, with an installed capacity of 2,5m HL for soft drinks and 0,82m HL for lager. The group
operates through the following companies and has the following shareholdings, with the remainder being owned by
local Angolan shareholders:
Company Name
Effective
interest
Coca Cola Bottling Luanda SARL 28%
Coca Cola Bottling Sul de Angola SARL 37%
Empresa de Cervejas N‟Gola SARL 28%
The brands marketed in Angola include Castle, Carling Black Label, and Redd‟s. The group also has a partnership
agreement with the BGI group to distribute Cuca products in the Malanje region.
SABMiller has commenced the construction of a brewery in North Luanda which will allow them to compete in the fast
growing beer market in that part of the country. The group has announced plans to invest US$125m to set up a
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