n South Africa more t han 50 microbreweries have found an opportunity i n t he shadow of market l eader South African Breweries (SAB) to cater for a new market of beer drinkers, but compared to international counterparts, SA’s craft industry is still relatively untapped.
Although SA has long been a nation of beer lovers with consumers that traditionally opted for mass-produced beer products, Dirk van Vlaanderen, investment analyst at Kagiso Asset Management, believes that the craft industry will continue to show strong growth ahead of mainstream beers, mimicking the trends seen in the US over the past 15 years.
“The traditional beer market in the US declined around 1%-2% annually since the start of the financial crisis due to a weak consumer environment and ongoing market s ha r e l os s e s t o premium i mport a nd c r a f t beer segments, as well as to t he spirits category,” says Van Vlaanderen, adding that the South African mainstream beer market i s l i kely to see some pressure from craft beers, but off a very small base.
SA’s artisan brew represents less than 1% of the country’s beer volume*, with South African Breweries, which has an annual brewing capacity of 3.1bn litres of beer, being market dominator.
In comparison, statistics from the Brewers Association, a not-for-profit trade association that represents the majorit y of America’s breweries, indicate craft beer production volumes increased 18% during the f irst half of 2014 and the country’s microbreweries now collectively hold a market share of over 10%.
“Based on volume market share, we believe that South Africa is probably 10 to 15 years behind the United States in terms of craft beer penetration,” says Van Vlaanderen, explaining t hat growth in craft beer is likely to persist in SA in the coming years.