Vietnam’s beer market under fierce competition amidst high growth

Updated at Thursday, 21 Jun 2018, 08:30
The Hanoitimes - Being one of the few markets in the world continuing to grow, Vietnam is a promising land for both foreign and local brewers, but the competition is increasingly stiff.
According to the country’s beer industry development plan until 2020, Vietnam’s beer production output will be roughly 4.1 billion liters by 2020. The number will rise to 4.6 billion liters by 2025 and 5.5 billion liters by 2035.
However, statistics from the Ministry of Industry and Trade (MoIT) showed that more than four billion liters of beer were consumed in the country last year, nearly doubling that in 2015.
MoIT reported that the country’s beverage industry has remained a good growth rate of more than five percent in recent years even as many other markets plateaued or declined.

Heineken is among the few brewers that are prospering in Vietnam’s beer market
Heineken is among the few brewers that are prospering in Vietnam’s beer market
Statistics from Euromonitor also showed that the global beer consumption volume remains unchanged since last year, while beer consumption in Vietnam soared. Notably, in 2008, Vietnam ranked eighth in Asia in terms of volume of beer consumed, however, the country now stands at the third position, only behind Japan and China.
All these mean not only foreign investors but also large domestic companies in other sectors cast covetous glances at the local beer market.
After buying a majority stake in the Saigon Beer Alcohol and Beverage Corporation (Sabeco), Thai conglomerate TCC Group is now eyeing shares in other brewers.
Meanwhile, besides maintaining the good growth, Dutch company Heineken has also bought many beer brands in the country.
Strict playground
Despite Vietnam’s beer sector having great potential to exploit, experts warned that competition is brutal and not all brewers are making money.
Selling beer in Vietnam is very hard, and only the very efficient survive, chairman of the Vietnam Beer Alcohol Beverage Association Nguyen Van Viet said, pointing to the so-called ‘beer clubs’ that began to mushroom a few years ago of which many have already shut down.
Notably, in July 2006, Asia Pacific Breweries bought two Vietnamese breweries from Foster's Group in a deal worth $105 million.
Besides, SABMiller co-operated with Vinamilk to establish a $45-million joint venture to develop a brewery in the southern province of Binh Duong, which was launched in 2007 with the initial capacity of 50 million liters per year. However, the joint venture faced difficulties in competing with existing beer products. As a result, Vinamilk had to transfer its entire holding in the joint venture to SABMiller after only two years.
Doing business in the beer market has become tougher as Habeco reported last year’s revenue and profit declined by two percent and four percent against the previous year to VND9.8 trillion (US$429.8 million) and VND751 billion ($32.9 million), respectively, despite massive spending on advertisements.
Data from market research companies showed that the market is dominated by three large companies -- Sabeco, Heineken and Habeco, which have 40 percent, 28 percent and 18 percent market shares, respectively.
According to Viet, among the major brewers in the Vietnamese market, Heineken and Sabeco are prospering, while others do not make satisfactory profits.
Vo Van Quang, an economist who advises many brewers, said the competition in Vietnam is harsh and even major global brands founder if they fail to sell their image to consumers. Success depends on marketing and not just products and deep pockets.
According to experts, the Vietnamese market will remain attractive for many years, thus luring more new players.
Competition would thus become even fiercer, and the only way companies would succeed is by diversifying their products and popularizing their brands, they said.  
Thao Le
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