Originally, U.S. fund managers gained entrance to the African beer market through investing in infrastructure. However, after noticing the continent’s age demographics – how large portions of the population are at the prime beer drinking age, and how local production is creating an opportunity for profits, U.S. mutual fund managers are turning their attention away from Milwaukee and are investing in the new brewery centers of Africa.

 

Harding Loevner’s $600 million Frontier Emerging Markets strategy recently added 730,000 shares of Tanzania Breweries Ltd. and 900,000 shares of East Africa Breweries. In addition, the Templeton Frontier Markets Fund added $3.58 million to East African Breweries and $11.8 million to Nigerian Breweries.

 

“It would cost four or five times more for Tanzanians to import beer than to make it domestically,” said Babatunde Ojo, Frontier Emerging Markets’ portfolio manager, adding that approximately 45% of all Tanzanians are between the ages of 15 and 45.

 

In other countries, cities including Dar es Salaam and Lagos rapidly growing and are forecast to see a rather quick increase of their young populations according to a 2015 report issued by Ernst and Young. And the continent as a whole is expected to see the largest increase in drinking age consumers by 2018, while North America and Western Europe have seen a steady decline in beer volumes of between 5% and 10% since 1998 according to Rabobank Research.

 

“If you invest in Africa, it will be a rocky ride between the possibility of economic and political instability,” said Francois Sonneville, Director in Food and Agribusiness Research at Rabobank International, “… but if you look at the long-term potential, the rewards you can reap are very interesting and worthwhile.”