Batanai Matsika 
FROM a global context, beer has become one of the world’s biggest consumer goods categories. Africa has been one of the fastest growing markets with South Africa being the largest beer market constituting about 30 percent of volumes, followed by Nigeria 15 percent and Angola seven percent.
Further, the low per capita beer consumption of about 10 litres, compared with a global average of 30 litres, indicates that there is a huge pool of potential to be tapped in Africa.
However, beer companies in Africa are subject to several regulatory controls given the adverse health and social consequences related to excessive alcohol consumption. Individual faith and lifestyle restrictions advocated by some religions against alcohol consumption has also served to somewhat limit the growth of volumes. According to the World Health Organisation (WHO), the harmful use of alcohol results in c2,5 million deaths each year.
In addition to the chronic diseases that may develop in those who drink large amounts of alcohol, consumption is also associated with an increased risk of acute health conditions such as injuries, including from traffic accidents. As a result, there has been several efforts to control the alcohol abuse and under-age drinking.
According to a research conducted by BMC Medicine in 2015 on the adverse health and social consequences of alcohol consumption in South Africa, approximately 62 300 adults died from alcohol-attributable causes of death in 2015.
With a total of approximately 529 400 deaths from all causes in 2015, roughly one in 10 deaths was attributed to alcohol. In addition, 60 percent of all alcohol-attributable deaths occurred in the low socio-economic status (SES) groups. Globally, illness and life expectancy follow a social gradient that puts populations of poorer countries as well as persons of lower SES within a country, at higher risk of dying prematurely.
Alcohol consumption has been found to contribute to the socio-economic differences in mortality within countries.
One of the ways that beer companies in sub Saharan Africa have been looking to control the adverse impacts of alcohol abuse has been through encouraging responsible drinking and migrating consumers to formal beer (healthier than home-brews). At around 10 litres per person, beer consumption in the region is significantly less than in developed markets.
It should be highlighted however, that this does not necessarily mean that alcohol consumption is low but clearly points to a large informal, unregulated market of home-brews in sub Saharan Africa.
AB InBev (formerly SABMiller) estimates that volumes of home-brewed alcohol in sub Saharan Africa are about three times the size of the clear beer market.
WHO)estimates that approximately 50 percent of the alcohol consumed in sub Saharan Africa is unrecorded. Overall, home brews are associated with negative health consequences given the harmful impurities.
The large home brew market in Sub Saharan Africa can be largely attributed to affordability factors. Examples of home brews include Umqobothi in South Africa and tototo in Zimbabwe.
Tototo (distilled beer) — whose alcohol content is almost 100 percent is illegal in Zimbabwe but consumption still happens in rural areas. Given the low-income levels, most drinkers-especially in rural areas can only afford home-brews.
One of the most exciting innovations has been Chibuku (opaque) beer that has become very popular in countries such as Zimbabwe, Malawi, Botswana and Zambia. Chibuku is based on a traditional beer recipe made from sorghum and/or maize (corn), depending on local tastes.
It is a low-alcohol beer sold in 1 litre cartons and ferments in the package, with alcohol strength increasing from 0.5 percent alcohol by volume (ABV) on day one up to 4 percent ABV on day five before expiry. Given its short shelf life, it must be brewed and consumed locally.
AB InBev has developed a variant, Chibuku Super’, which was launched in Zambia and Zimbabwe. Chibuku Super is lightly carbonated and pasteurised, meaning it has a fixed alcohol content of 3,5 percent ABV and a longer shelf life.
It also comes in PET packaging and has a longer shelf-life than the core Chibuku brand, which ferments in the packaging and expires after five days.
Chibuku Super is an interesting innovation in terms of tapping into the informal beer market given (i) the longer shelf life of up to 21 days, (ii) improved durability which increases the penetration of Chibuku particularly in marginal areas and (iii) the improved consistency in the quality.
Overall, pushing for affordable formal beer has been an important strategy aimed at migrating consumers from home-brews.
In conclusion, Morgan & Co Research likes Delta’s product portfolio that cuts across all SES groups in the economy and ensures the migration from home-brews.
The brewer also provides a solid route to gain direct exposure to Zimbabwe’s growth potential.
Cheers to the strong cash flow generation capability, dominant market position and proven management team. BUY Delta!
● Matsika is head of research at Morgan & Co, and founder of piggybankadvisor.com. He can be reached on +263 78 358 4745 or batanai@morganzim.com / batanai@piggybankadvisor.com
