Opportunities rise in Africa for non-alcoholic malt beverages

Produced in much the same way as beer, except not fermented, Non-alcoholic malt beverage drinks are very popular, not only in Nigeria, but in the rest of West Africa as well as Central Africa and parts of East Africa.

In Nigeria, the non-alcoholic malt drink category represents a substantial percentage of the total volume and revenue of breweries. This dark beverage is produced in much the same way as beer, except that it is not fermented and therefore contains no alcohol. The drinks are very popular, not only in Nigeria, but in the rest of West Africa as well as Central Africa and parts of East Africa.

While the cost of setting up the huge breweries that dominate the brewing sector in Africa is out of the reach of most African investors, the craft brewing revolution that is taking place all over the world represents an opportunity for investors to quietly enter the industry as a producer of non-alcoholic malt drinks.

Lower costs of equipment

The Covid-19 pandemic, which seems to have had adverse effects on the beer business everywhere, has not stopped people from investing in craft brewing. The first microbrewery in Lagos, Nigeria opened in February 2020.

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The upsurge in the number of craft breweries all other the World has accelerated a lot of innovations in the development of plants and machinery in the brewing sector. This has led to a reduction in the cost of setting up standard microbreweries as well as bottling and canning plants.

Small microbreweries are now able to purchase small, quality brewing and packaging plants based on their budgets. When the craft beer movement started, a lot of the pioneers had to improvise to be able to produce their products. But now, machinery suppliers can supply low-capacity plants capable of producing small batches.

Even packaging plant suppliers are already producing small high-quality plants for beverage products. These include automatic bottling and canning plants that can produce as low as 500 to 1,000 bottles or cans per hour. Small tunnel pasteurizers, bath pasteurizers, returnable bottle washers and labellers are also available.

Market fundamentals rise

According to Hexa Research, among the factors that are driving the rise in demand and popularity of non-alcoholic malt drinks is the category’s perception as a source of nutrition, which regulates appetite and keeps bones and skin healthy. They are also gaining popularity as an effective alternative to high-calorie soft drinks. Further, the rising consumption of non-alcoholic malt beverages as sports drink among gym professionals and athletes will also add to the increasing consumption in the coming years.

Non-alcoholic malt beverages are gaining popularity as a source of nutrition and as an effective alternative to high-calorie soft drinks.

The company notes that population growth and rising disposable income in Nigeria, Ethiopia, and Kenya are projected to spur malt drinks manufacturers to establish strategic partnerships with distributors over the coming years, while local production of the beverages will rise as well.

It adds that the Middle East and North Africa (MENA) region is predominantly a market for non-alcoholic malt beverages, as alcoholic products are banned in many countries in the region. As the region’s governments of Saudi Arabia, UAE and Qatar shift towards promoting investment in food and beverage sectors to expand the manufacturing output, new market opportunities in this category will be discovered.

Opportunity in malt beverages

Investors can take advantage of these developments in the craft brewing sector to invest in microbreweries producing non-alcoholic malt drinks.

A few hundred thousand US dollars in investment will be enough to acquire the machinery for a small plant capable of delivering up to 1.2 million litres of malt drinks a year, packaged into both glass bottles and cans. Production from this plant can be further enhanced by the use of a mash filter instead of the regular lauter tun for mash filtration, as more batches can be made in a day with the use of a mash filter.

In Africa, non-alcoholic malt drinks can be packaged into generic malt bottles initially. This will save the prospective investor a lot of start-up funds as he or she will not need to invest in a very expensive customised bottle mould that will also require that a huge quantity of bottles be ordered from bottle manufacturing factories. With the generic bottles being used by other breweries, a few pallets can be ordered.

In the same manner, plain cans can be used instead of printed cans. The plain cans can be labelled with shrink sleeve labels or sticker labels. Using plain cans means small producers will not need to tie up huge sums of money in stocks of cans that will be required by cans suppliers if the investor chooses to use printed cans.

This feature appeared in the March/April 2021 issue of Food Business Africa. You can read the magazine HERE

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