Beverage Industry In South Africa Size & Share Analysis - Growth Trends & Forecasts (2023 - 2028)

Beverage Industry In South Africa Size & Share Analysis - Growth Trends & Forecasts (2023 - 2028)

The South Africa Beverages Market size is expected to grow from USD 18.27 billion in 2023 to USD 23.34 billion by 2028, at a CAGR of 5.02% during the forecast period (2023-2028).

Key Highlights

• The South African beverages market has experienced significant growth in recent years due to various factors, including changing consumer lifestyles and preferences. With busy schedules and increasing demand for convenience, consumers are opting for quick and on-the-go beverage options that offer immediate benefits such as energy, hydration, or nutrition. This trend has led to an increase in the demand for bottled water, energy drinks, sports drinks, and ready-to-drink tea and coffee, among other products. The market is also witnessing a shift towards healthier and more natural beverage options, with a growing demand for organic, plant-based, and functional beverages.
• The wider availability of products in the market studied, together with the continued strength of well-positioned brands, have been the main drivers of growth in the beverages market across the country. Moreover, the demand for premium alcoholic beverages in South Africa has been growing, which is expected to continue during the forecast period. Local players have been introducing fruit hops in the preparation of craft beer, which has become popular among consumers who prefer a smooth and juicy mouthfeel. This strategy allows the companies to position their products as premium, expected to benefit market growth.
• Furthermore, with a rise in the number of social drinkers, particularly in African countries, due to the improving economic scenario and growing middle-class population, the demand for alcoholic beverages, including beer, has increased. On the other hand, alcohol-free and low-alcohol beer have also gained popularity, especially among young consumers trying to make positive lifestyle choices and manage their alcohol intake. Additionally, the rising influence of social media, increasing Internet penetration, and growth of the e-commerce sector have enabled manufacturers to create improved retailing channels and market presence.

South African Beverage Market Trends

Increased Penetration of Alcoholic Beverages in the Country

• Alcoholic beverage in South Africa is anticipated to witness growth owing to the growing number of adults gaining interest in alcoholic consumption coupled with the premiumization of beer, wine, and low alcohol-based beverages. The changing consumer preference towards low-alcohol beers and craft beers is an important trend in the alcoholic beverage market. Due to the rising premiumization trend associated with low alcohol content, beer producers nationwide have been focused on producing high-quality products.
• For instance, in March 2021, South African Breweries (SAB), a subsidiary of AB InBev, launched low-alcohol Flying Fish Seltzer beer in the country. The company claims that Flying Fish Seltzer beer is formulated with 5.5% ALC/VOL and contains 35 calories per 100 ml. Moreover, the product comes in a premium 300 ml slim can with two flavors: lemon and raspberry.
• Moreover, the market has witnessed an increased proliferation of smaller and independent breweries selling locally and directly to consumers. The rise of smaller and independent breweries in the South African market, particularly in the craft gin and microbrewery sectors. This trend is not unique to South Africa and is reflective of a global shift towards more niche and artisanal products as consumers increasingly seek out unique and personalized experiences.

Growing Trend of Functional Beverages

• Functional beverages are becoming increasingly popular among millennials due to rising advertising and promotional spending, coupled with health consciousness among the wider population. Additionally, ads for energy drinks portray them as beverages that energize the intellect, revive the body, and improve performance and stamina. For instance, Red Bull King of the Air, an international kiteboarding competition, was held in Cape Town in January 2020.
• Moreover, functional beverage products in South Africa are embracing a growth phase with new flavor formulations, reduced sugar and calories, and ingredient innovations such as botanicals and herbs. For instance, Coca-Cola, South Africa, offers an energy drink called Coca-Cola Energy. The drink, available in a 300-ml can, contains caffeine, guarana extracts, B vitamins, and no taurine.
• With the growing demand for functional beverages, the key players in the market are offering new products fortified with additional nutrition to enhance their market position in the field. For instance, Red Bull South Africa offers Red Bull Green energy drinks fortified with B vitamins, amino acids, and natural sugar (beet sugar) to cater to consumer demand for low-sugar functional beverages, per the company's claims.

South African Beverage Industry Overview

The South African beverages market segment is dominated by global players, holding a significant market share in the country. Anheuser-Busch InBev NV and Distell Group Limited hold a prominent share in the alcoholic beverage segment of the country, whereas the Coca-Cola Company holds a prominent position in the South African non-alcoholic beverages market segment.

Manufacturers are increasing their investments in R&D and marketing and expanding their distribution channels to maintain their positions in the market. The major players are focusing on providing consumers with innovative offerings while including functional benefits in each of their products. The players in the region are reducing the sugar content in their products to mitigate sugar content-related taxes.

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