Author: Lucy Corne
In 2019, Ethiopia had one of the most rapidly expanding economies in Africa. In fact, the NASDAQ stock exchange declared it not only to be the fastest growing economy on the continent, but second only to Guyana in the world. This would no doubt come as reassurance to the international brewing companies that have invested in the Ethiopian market, but it would not come as a surprise.
Much like its economy, Ethiopia’s beer market has been steadily growing for the past decade. In 2014, annual beer production stood at 5.6m hectolitres, rising to around 7m hectolitres in 2018. Data analytics company GlobalData has predicted that the figure could reach 25m hectolitres by 2023. Consumption per capita, while still falling way below countries like Namibia and South Africa, almost doubled between 2012 and 2019. It currently sits at about 10 litres per year, according to Vasari Beverages, a major investor in one of Ethiopia’s largest breweries, Dashen.
UK-based Vasari is not the only foreign player in the Ethiopian beer scene, although outside investment is a fairly recent development. Ethiopia’s first beer-making facility was St George Brewery, opened in 1922 by Mussie Hal, a German national of Ethiopian descent. In 1942, ownership of the brewery was handed to Emperor Haile Selassie. In 1974 the brewery was nationalised and remained state-run until 1998 when it was purchased by BGI, the brewing arm of French beverage company Castel. BGI has since added other brands but St George remains the company’s flagship brew and the country’s biggest selling beer. Over the years though, St George’s competition has grown considerably, particularly from foreign breweries and investors seeking to enter the Ethiopian market.
A trio of setbacks
BGI’s biggest competitor arrived in 2011 in the form of Heineken who bought out two previously state-run breweries. Today, Heineken has invested over ETB 92bn (approx. EUR 2.1bn) into manufacturing and agriculture in the country, producing brands including Bedele, Harar and Walia as well as non-alcoholic malt beverages Sofi and Buckler. The Dutch brewing giant had been set to invest further into the country’s brewing and malting industries, but according to AllAfrica.com, the latest round of investment was halted late last year following two new developments in the beer sector.
The first blow came in May 2019, when the Ethiopian government banned all alcohol advertising on TV, radio and billboards. It was poor timing for new player United Beverages, who entered the Ethiopian market with a EUR75m investment in 2016. The company is a partnership between Ethiopian family-owned business group Kangaroo Plast and Mauritian company United African Beverages. Based in Modjo, United Beverages has an annual production capacity of 1.6m hectolitres and currently produces just one beer. Anbessa – a pale lager – was launched in May of last year – the same month that advertising in the industry was forbidden.
But the ban on alcohol advertising was only the first in a triple whammy of blows to the Ethiopian beer industry. The second came in December 2019 when a bill was tabled that would increase excise on beer, among other goods. The bill passed in February 2020 and soon afterwards came the third blow: the global Coronavirus pandemic.
The combined effect of these three factors has of course had a detrimental impact on what was becoming one of the continent’s most vibrant beer industries. UK-based beverage industry giant Diageo, who own the Meta Abo brewery in Addis Ababa, has reported net sales declines of 24% across their beer and spirits portfolio in Ethiopia in 2020, citing the excise increase, supply issues and on-trade closures due to the pandemic as reasons for the losses.
A brighter future
Despite the difficulties of the past year, there have been some positive developments. BGI recently released Doppel Munich, a dark lager that is already popular in the Democratic Republic of the Congo. It’s a brave move in Ethiopia where pale lagers rule and anything swerving too far from the norm – including the globally popular Guinness – has failed to catch on.
One brewery has managed to win over drinkers with something a little darker though. The Beer Garden Inn, a small hotel in Addis, is home to Garden Bräu –Ethiopia’s first microbrewery. There are two beers on tap: Blondy – a Helles – and a Munich Dunkel known as Ebony. Co-founder Banshebi Tejiwe studied brewing in Ulm and Munich and cut his teeth at larger breweries in Ethiopia before opening Garden Bräu in 2006. The Ethiopian capital is now home to a second microbrewery, Bole, which serves an amber lager and a stout alongside the must-have pale lager.
And as has been the trend throughout the world, non-alcoholic beers are gaining popularity in Ethiopia, with BGI being the latest brewery to add a non-alcoholic malt beverage to their line-up: Senque Malt. In 2019 Habesha, one of the country’s smaller breweries, also released a non-alcoholic beer, Negus Malt, which is flavoured with coffee and the Ethiopian medicinal plant tenadam. Negus is the second beer from the Debre Berhan-based brewery, whose eye-catching cans of golden lager are carried on the country’s national airline.
Once the economy recovers, it looks like the brewing industry will have a positive impact on agriculture and the processing of raw ingredients. United Beverages have set a lofty goal to eventually use only Ethiopian ingredients in their beer, although at present they import much of their malt from Europe. When market intelligence company Asoka Insight compiled a report on the industry in 2019, there were only two functioning malt plants in Ethiopia, supplying less than 50% of the malt required by the industry. However, Belgian company Boortmalt and French based Soufflet Malt had both signed contracts to launch malt processing plants in the country.
Heineken too are investing in agriculture in the region, with their CREATE Project which aimed to open two further malting plants by the end of 2020. The plants would each provide an additional 60,000 tonnes of processing capacity annually, helping Heineken reach their in-Africa goal to source 60% of the raw ingredients locally.
It’s unclear whether Heineken’s barley project will meet its targets this year, given all of the recent setbacks in the Ethiopian beer industry and indeed the wider economy. Experts are predicting that the pandemic will reduce Ethiopia’s economic growth by almost 3% for 2020. Still, the country’s state of emergency was lifted in September after five months, and economic activity is slowly restarting again. Let’s hope that people’s thirst for a cold refreshing beer is restarting along with it.