Hot African prospects for drinks groups

Quarterly updates from Diageo and SABMiller came on the same day but showed the spirits group flagging and the brewer prospering. The common factor was a strong result in Africa, where sales at constant currencies rose 8 and 9 per cent respectively.

The success, propelled by a growing thirst for beer, occurs as western investors such as Prudential and Bob Diamond's Atlas Mara show growing appetite for African assets. Africa is the land of opportunity.

It is tempting to add the cynical word "again" to that prognostication, since emerging regions tend to rotate in and out of fashion. The other qualification is that Africa is very big. To speak of it as one market bespeaks the kind of naivete that can lead to burnt fingers.

Even so, it is heartening that a long economic decline has reversed. Growth in sub-Saharan Africa will hot up from 4.5 per cent in 2014 to 5.1 per cent in 2017, according to the World Bank. Urbanisation and wider affluence give drinks companies plenty to go at.

The job of SABMiller and Diageo in many parts of the world is to lure consumers from cheaper brands to pricier concoctions. In much of Africa it is to wean drinkers off home brew and on to conventional beer. SABMiller has created a halfway stage in Chibuku, a sorghum beer that continues to ferment rapidly after purchase.

There will be many a slip 'twixt glass and lip for multinationals in Africa as in South America, where Brazil wrongfooted many. South Africa, SABMiller's historic home, is economically weak and politically dangerous. But investors should be thankful both businesses have strong position on the continent - Diageo, notably, through Guinness sales in Nigeria - when growth is decelerating or failing to support sales elsewhere.

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