Angola Food and Drink Report Q4 2012

BMI View: Angola has one of the strongest economic growth outlooks in Sub-Saharan Africa, and we areunsurprisingly bullish on the prospects for food, beverage and mass grocery retail sales growth in thecountry over our forecast period. The continued expansion of the domestic oil industry will be the chiefdriver of strong economic expansion, with investment in infrastructure (to support the development of theoil sector) also a major contributor. Oil- and export-led economic growth will feed into a positive outlookfor private consumption over our forecast period, which translates into bright prospects for the consumersector.

Key Forecasts

Per capita food consumption, compound annual growth rate in local currency 2011-2016: 13.8%

Beer production growth in 2012: 15.9% year-on-year (y-o-y); compound annual growth rate to2016: 12.7%

Mass grocery retail sales growth in 2012: 19.8% y-o-y

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 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 2016 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, an expected 57% of Angola’spopulation will 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’s Q4Food & Drink Risk/Reward Ratings for Sub-Saharan Africa. The country scores well above the regionalaverage in terms of rewards – an illustration of the massive growth opportunities available in the region.However, it also scores well below average in terms of risk, highlighting the challenge that investors facein fully realising this potential opportunity. Overall, Angola ranks comfortably above the Sub-Saharanaverage in our regional ratings.