Emerging markets are dynamic places and although many people living in them have low per-capita incomes, there’s a growing number who can afford international spirits brands. This increased demand means that, from a spirits brand perspective, new sales channels are also emerging.
Nowhere is this more evident than in Africa; a continent comprising 50 markets (where alcohol sales are permitted) that are at different stages of growth, but all of which have emerging channels within them.
Africa has traditionally been on-premise-led, with consumers preferring to drink beer and spirits in bars. This is still the case – in some countries, the on-premise is estimated to account for well over 50% of sales – but there’s a gradual shift to more at-home consumption, which has been accentuated by COVID-19. Traditionally, off-premise purchases would be made in small stores where, in most cases, consumers cannot browse and pick up bottles to examine them, but buy them through a counter at the front of the store. This is also true of the general grocery channel, where most sales are through informal kiosks, markets and family-run stores.
There is, however, a growing consumer demand for international brands, value for money and a strong need to ensure the brands they are buying are the real thing. For brand owners, the increase in home consumption is a good way to introduce consumers to more premium spirits and get them interested in new ways of drinking, such as cocktails. These factors are driving the growth of the modern off-premise with the emergence of more formal supermarkets and hypermarkets either run by local or international companies.
Carrefour is one of the international multiple retailers that has developed its footprint across Africa, with stores in a number of markets including Kenya, Ivory Coast, Cameroon and Senegal. Game, the Massmart-owned supermarket chain, has stores in South Africa, Nigeria and Ghana. These modern supermarkets offer a more premium and experiential shopping experience compared with traditional stores and are, therefore, important places for international spirits brands to be available.
In most markets, when thinking about emerging sales channels for spirits brands, e-commerce probably springs to mind first. This is also true in Africa, since it’s an important channel for reaching the growing number of middle-class consumers. E-commerce has been slow to develop due to the infrastructure challenges in African markets and, therefore, may never be as big a channel as it is in more developed markets. However, it’s a growing and important channel to be present in, not least because of the opportunity to advertise and raise brand awareness.
Jumia is by far the largest e-commerce platform, often dubbed the Amazon or Alibaba of Africa. Its platform for selling alcohol brands is called Jumia Party and is available in Ghana, Nigeria, Uganda and Kenya. In 2008, Pernod Ricard recognised the importance of this channel for Africa and took a stake in Jumia. Kilimall is an example of another well-organised e-commerce platform in Kenya.
Major hotel chains plan to expand across Africa. Groups such as Accor, Marriott, Radisson and Hilton all have ambitious room development plans. The top three countries for growth of new rooms are Egypt, Morocco and Nigeria. This growth brings with it another potentially-lucrative channel for spirits brands.
These four- and five-star hotels serve international cuisine, have well-stocked bars and provide cocktail menus and well-trained bar staff. International guests want to drink premium international brands and cocktails and, therefore, these hotels cater for their needs. Subsequently, local guests are influenced by what they see in these hotel bars, so they’re important from a brand-building and image point of view. They’re also where more affluent local consumers want to be seen drinking.
Prior to COVID, the events scene was growing across Africa and is now returning. These can be events that spirits brands sponsor, such as music or food festivals or brand-created events. Jameson Connects, a music-led event in Nairobi, Kenya, is a good example of the latter. These are marketing vehicles to help raise awareness for brands and are also fantastic sales opportunities.
Airport retail is relatively underdeveloped across the continent. Traditionally, the stores selling spirits brands have been run by local operators and in the same airport terminal, passengers will find many small retail stores seemingly selling the same products. However, with travel increasing both within the continent and internationally, the quality of the retail experience has been getting better. Global retailers, such as Dufry and Lagardère, that have opened stores in airports including Accra, Lagos and Nairobi, have helped. For spirits brand owners, this offers an opportunity to be seen by more affluent local consumers and as support to local market initiatives.
Emerging markets are exciting and dynamic places in which to do business. They’re constantly evolving and new channels are developing, often driven by consumer needs and the entrepreneurial nature of the people in-market. Anyone working in these markets should keep a close eye on the new trends and opportunities for spirits brands and remember that it’s not only the markets themselves that are emerging but the sales channels too.
This article was originally published in September’s issue of Global Drinks Intel magazine. For details of how to subscribe, click here.
