The Beer Association of SA (Basa) says it is strategically targeting growth in the low- and no-alcohol markets while seeking to expand research & development (R&D) of local barley and hops varietals that farmers could grow for potential export.
CEO Charlene Louw said on Friday that as the beer industry recovered from the Covid-19 disruptions, the local sector was looking to tap significantly into the growing zero-alcohol trend that consumers were gravitating towards in a bid to improve their health.
She said the beer industry, which is responsible for one in every 66 jobs in SA, would be expanding its offerings into the growing teetotaller market as the market’s tastes progress in that direction.
“I think society is moving more and more towards being very concerned about health, wellbeing, wellness and making better choices for themselves about their health and wellness,” Louw told Business Day. “Given the innovation about those types of beverages within the beer sector, I do think there’s definitely a market that is growing in that space.”
Brands such as Castle Free, Heineken 0.0, Devil’s Peak Hero and Becks Blue have already begun to leverage this niche market, despite South Africans being rated among the top-10 heaviest drinkers in the world, according to the World Health Organisation.
Louw said that while the sector was still in its infancy, it was gaining traction and all indications were that this market would continue to grow.
SA’s economy benefits significantly from the beer sector, which contributes more than R70bn in gross value added to GDP, through employment, opportunities for alcohol producers and tax contributions.
A study by industry body DF-SA, an industry body that brings together producers of beer, wine and spirits, revealed that the alcohol sector contributed R226.3bn, or almost 3.6%, to SA’s GDP in 2022.
The largest share of the effect of beer in SA’s economy arises from beer manufacturers making and selling beer locally. However, its value chain includes processing, logistics and warehousing among other elements that bring a beer from farm to glass.
Louw said while large manufacturers were managing to dust themselves off after the pandemic, the same could not be said for many microbreweries that did not reopen after shutting doors at the height of lockdown restrictions.
She noted that though Basa was specifically targeting the development of small and medium-sized brewers, the organisation was discovering that brewers frequently needed to import certain grains from abroad to experiment with various beer styles. This presented an opportunity within the agrispace for R&D operations that can develop varietals of grains, allowing farmers to scale up certain operations that can grow a range of grain varietals for export.
“So there’s definitely opportunity in the agrispace as well for us to fund and grow farmers,” said Louw. “Consumers are excited about these new and exciting beers that are coming out. But at times [they] are only accessible to that particular macroeconomy or that local geography where that microbrewer is located.”
However, it is expensive for a microbrewery to scale itself and the cost of equipment, which by and large needs to be imported, is a hurdle.
The CEO said SA did not have enough funding agencies or institutions that were creating packages that enable small, medium and micro enterprises to scale up. This was among a plethora of challenges that Basa was working on solving, with the association believing “the market is ready for that variety”.
“These microbreweries are contributing to that local economy or that micro economy that they’re in. They are employing people within that particular jurisdiction, but they could do so much more,” said Louw.
Basa, whose members include Heineken SA, SA Breweries, United National Breweries and the Craft Brewers’ Association of SA, has reiterated calls for the government to re-evaluate a reasonable taxation scheme for beer that is at or below the rate of inflation, warning of a mushrooming illicit beer trade, from which the state cannot recoup taxes.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.