Brands raise a toast to Africa expansion Deep inside the brewery, two long green snakes of bottles race along on opposite conveyor belts. Those to the left are being filled with Star, Nigeria's oldest locally made beer, and those to the right with Heineken lager. "We go for 24 hours to keep up," shouts Femi Ajileye, the plant's quality manager, over the din. That means producing up to 1.7m bottles of beer and 1.2m cans every day in this Lagos plant, just one of eight in the country operated by Nigerian Breweries, a subsidiary of Heineken. IN Retail & Consumer Over the past decade, the beer market in Africa's most populous nation has expanded 10 per cent a year, attracting hundreds of millions of dollars in new investment from the Dutch brewing group. Diageo, which sells more Guinness in Nigeria than anywhere else in the world, and SABMiller, have also poured in money to expand capacity. "Our biggest brewery outside of Europe is in Nigeria," said Siep Hiemstra, president of the Middle East and Africa region for Heineken, during a conference for international analysts in Lagos late last year. This is one of our fastest-growing markets. For many companies the same can be said for sub-Saharan Africa more broadly. Only a decade or so ago, foreign businesses ignored large swaths of the continent due to perceived risk and the relatively small size of its economies. Now global companies in the consumer goods sector are under pressure to invest or expand operations. Nestlé last year inaugurated new factories in the Democratic Republic of Congo and Angola. The Swiss company is among the more than 70 per cent of global consumer packaged goods makers now present in the African market, according to the consultancy Bain. These companies are facing stiff competition from emerging market rivals from Istanbul to Johannesburg and Mumbai, such as India's Godrej, which sells hair extensions, lotions and soaps, and South Africa's Distell, whose giant billboards advertising cider rise incongruously in the Liberian capital Monrovia. As Bain noted recently: "Skipping Africa means potentially missing significant growth opportunities." Several factors are driving an increase in consumer spending. The first is improved economic performance in many countries. Between 1990 and 2000, per capita incomes across Africa grew just 15 per cent. In the next decade they rose 70 per cent, according to Standard Bank. As important as the GDP growth are the continent's demographics. Sub-Saharan Africa's population is growing faster than any other region of the world. From 900m people in mid-2012, the population is expected to reach 2.1bn in 2050. Reaching consumers with branded goods is also getting easier. Some 37 per cent per cent of sub-Saharan Africans already live in cities, where spending is higher and increasing faster than in rural areas. In India, by comparison, only 31 per cent of the population is urban. There is much talk of an expanding middle class in Africa. But the bottom of the economic pyramid remains wide, with most Africans still living on less than $2 a day and spending the bulk of that on food and basic household items. While individually insignificant, collectively these consumers also represent an attractive market. In Nigeria, most fast-moving consumer goods companies, selling everything from soap to instant noodles and sausage rolls, have seen their revenues grow 15 to 20 per cent a year over the past five to 10 years, according to Exotix, the frontier market brokerage. Demographics aside, the companies have been smarter in marketing their branded goods to people on low incomes, for example by reducing packet sizes. Africa's wealthy revel in luxury labels February 2013. Queen Ahneva Adegeye is smiling. Valentine's day is approaching, and orders are pouring into the Nigerian office of Quintessentially, the global luxury concierge service. "We've had a lot of requests for Hermès bags," says Mrs Adegeye, Quintessentially's managing director in Lagos. Men ordering them for their wives, and wives ordering for themselves. The bags, flown in from Europe, cost thousands of dollars each. But for the super-rich in Lagos, it is pocket change. More serious purchases will happen this month, when representatives of the luxury yacht company Sunseeker arrive to show off their new boats, which can cost millions of dollars. Mrs Adegeye is confident there will be buyers . . . Continue reading here Promasidor, a privately owned African company that operates in 25 countries, sold 4bn sachets of dairy beverages and seasoning for between 10 naira (6 US cents) and 20 naira each in Nigeria alone in 2012. While Keith Richards, who runs the company's operations in Nigeria, believes there is room for more growth, he also knows that many of his customers struggle to make ends meet. When Promasidor tried to increase the price of the cheapest milk sachet to 15 naira (10 US cents) sales dropped nearly 90 per cent. "Most of our customers do not have more disposable income than a few years ago," said Mr Richards. Brewers have also had to be innovative, as mainstream branded beer is still beyond most household budgets. In Tanzania, for example, a worker must typically work for about five hours just to afford a beer, compared with an hour in South Africa or 15 minutes in the US. So, to widen its reach in Tanzania and other countries, SABMiller started selling Chibuku, an opaque beer made from maize and sorghum, at half the price of its regular beers. But it is not all bottom-end growth. Accurate data on consumer spending is hard to come by. But anyone spending time in cities such as Nairobi or Accra, with their new malls, housing developments and mobile phone shops, would not dispute that the middle class is expanding there, albeit from a low base. "There is movement from the bottom of the pyramid to the middle, even if it's not happening as fast as people would like," said Binta Cisse Drave, Africa analyst at Exotix. At the same time, spending patterns are changing, with younger consumers often better educated than their parents. They tend to spend more on healthcare products than previous generations, and also have greater brand awareness, thanks to the internet and social media. Both Heineken and SABMiller have seen some of their biggest sales increases in recent years on their most expensive beers. And BlackBerry mobile handsets - while far from the cheapest smartphones - have led the market in South Africa and Nigeria. Other multinationals are also betting that the middle-class market will keep growing, and are trying to build customer loyalty by tailoring products to local conditions. Samsung, which has opened retail stores in numerous African countries, has a range of "Built for Africa" appliances, including refrigerators that are designed to keep working even if electricity cuts out for several hours. Fridges may still be far too expensive for the majority of people. But Bismarck Rewane of Financial Derivatives, a Lagos consultancy, believes this will change as governments improve the quality of mains power supply, as is slowly happening in Nigeria. "There will be a substitution effect - instead of spending money on a generator a person will be able buy a refrigerator," he said. That's why these companies are investing now. The market may not be big yet but they know that growth will come in the next few years.