Angola Food and Drink Report Q1 2013

BMI View: Angola has one of the strongest economic growth outlooks in Sub-Saharan Africa, and itsfood and drink sector is likely to provide some excellent opportunities over the next few years as incomesrise and more capital is invested into the sector by multinational companies in particular. The continuedexpansion of the domestic oil industry will be the chief driver of strong economic expansion, withinvestment in infrastructure (to support the development of the oil sector) also a major contributor. Oilandexport-led economic growth will feed into a positive outlook for private consumption over ourforecast period, which translates into bright prospects for the consumer sector.

Key Forecasts

Per capita food consumption, forecast 2013 growth: 12.9%; compound annual growth rate inlocal currency to 2017: 12.9%

Beer production growth in 2013: 9.9% year-on-year (y-o-y); compound annual growth rate to2017: 9.4%

Forecast mass grocery retail sales growth 2013: 19.5% y-o-y; compound annual growth rate to2017: 18.4%

Key Trends

Organised Retailing: All Southern Africa markets lag regional leader South Africa in terms of thepresence of organised grocery retailing. Across the region, formalisation will be a key driver of massgrocery retail sales growth, as more and more shoppers trade up to organised retail channels. This will betrue even for the region’s more mature markets; however, we also expect the steady introduction of newstore offerings, such as non-food products, to help to support growth. In Angola, we estimate that onlyaround 5% of grocery retail sales are accounted for by the organised sector; this provides tremendousroom for growth.

Beverage Sector Growth: We expect to see strong beverage sales growth throughout the region over ourforecast period to 2017 and beyond. There is enormous potential in beer and soft drinks, specificallycarbonates, at this stage of the region’s development. Throughout the region the beer market is alreadykeenly contested, and this level of competition will lead to significant new investment over our forecastperiod, driving strong sector growth. At an estimated 45 litres per annum, Angola already has a high beerconsumption 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 basefrom which most growth is occurring and the severe income inequalities that still persist. Angola’spopulation dynamics are a major positive for investors. The country’s already attractive 19.6mn-strongpopulation base (as of 2011) will grow to 24.8mn by 2020 and by an enormous 109% on the 2011 level to42.3mn in 2050. Most notable is the age profile of the population; in 2012, 57% of Angola’s populationwas thought to be younger than 20, and this provides immense long-term growth opportunities forregional investors.

Risk/Reward Ratings: Angola falls in an impressive third place out of 13 regional markets in BMI’sQ113 Food & Drink Risk/Reward Ratings for Sub-Saharan Africa. The country scores well above theregional average in terms of rewards – an illustration of the massive growth opportunities available in theregion. However, it also scores well below average in terms of risk, highlighting the challenge thatinvestors face in fully realising this potential opportunity. Overall, Angola ranks comfortably above theSub-Saharan average in our regional ratings.