AfricanCouple drinking wine - Nigeria: Bubbles, brands and new consumers

Sub-saharan Africa is starting to feature on many wine producers’ radars, led by Nigeria, Angola and South Africa

Africa is an exciting place to be selling to these days. After decades of underperformance, there are increasing signs of economic heat in certain countries, particularly those blessed with resources and an educated population.

Chief among these new African stars is Nigeria. It has a population of 167 million, of whom a third are under 25, an economy fuelled by natural resources and trading, and a small but rapidly expanding segment of consumers with spending power.

While the term “middle class” is often used to describe this latter group, it is a bit misleading. The lifestyle and behaviours of “middle class” Nigerians has little in common with the middle classes in developed world countries earning the equivalent of US$50,000+ a year. To be classified a “middle class” Nigerian, according to the African Development Bank measure, you have disposable income of between US$2 and US$20 a day, or approximately US$1,000-$7,500 a year.

For westerners, this seems like a paltry number; and it is, if the earner in question is a hard pressed parent with several children to educate and feed. However one needs to look beyond the rigid definition for more enlightenment. The recent growth in Nigeria’s “middle class” in reality means a single, 20-something university-educated Nigerian now has meaningful cash in his or her pocket to spend. Not enough to plough into property or washing machines perhaps, but certainly enough to have a good night out.

What really sets Nigeria’s young, monied middle class apart is the obsessiveness of many of its members with the modern, branded, technologically advanced and bling. According to long-time observers of Nigerian culture, there has always been an obsession with looking your best, and showing off your wealth, even if that wealth might still be quite modest. In recent years, this tendency has been fuelled by more money flowing into a slightly wider group of pockets, and increasing access to world culture via the internet. This is a country where 56 million people go online every day, mostly via BlackBerrys, Samsungs and iPhones.

In this context, alcohol in general, and well known alcohol brands in particular, play a key role. Unlike German cars and foreign holidays, which are still beyond the reach of all but the elite, Nigerians now find themselves in a world where they can suddenly afford to buy smaller, but highly visible, tokens of affluence – and global clothes, electronics and drinks. What’s the point of saving money for a cheap car (less than half of middle class Nigerians own one, according to a recent survey commissioned by Renaissance Capital) when you can buy your friends stylish drinks in a bar to celebrate the end of the working week? “For many Nigerians it’s perfectly acceptable to spend their last Naira [local currency] on status items,” says Sarah Fitzgerald, MD of Executives in Africa, an executive search firm working in Nigeria. “It’s important to look successful.”

In 2011, the country consumed around three quarters of a million bottles of Champagne, making Nigeria the second-fastest growing Champagne market in the world over the previous 5 years, according to a recent Euromonitor press release, and placing it in the top 20 Champagne markets in the world. Its wine market appears to be growing at a similar pace, and it’s one of the fastest growing markets for Chivas Regal, the premium scotch brand owned by Pernod-Ricard.

For now much of the heat in the consumption economy is confined to urban centres like Lagos, and focused on a few very high visibility luxury brands and categories. Most economic observers believe that the Nigerian economy will grow rapidly over the next decade, along with the population, and some of this wealth created will find itself trickling down to more young middle class professionals.

With this in mind Wine Intelligence is planning to do its first research report about sub-Saharan Africa, focusing mainly on markets such as Nigeria, Ghana, and Angola. In the past, the main problem with these countries was getting hold of accurate data. To a certain extent this remains, but the advent of mass mobile phone usage has reduced the cost and complexity of conducting small market research studies with certain segments of the population. Look out for more news on this towards the end of the year.

Author Richard Halstead: