Competition heats up Vietnam’s beer guzzling market

Thanh Nien News

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A staff arranges beer cans at a supermarket in Ho Chi Minh City. Photo: Hoang Viet
With foreign firms eager for a share of Vietnam’s rapidly expanding beer market, estimated to grow at around 10 percent per year, and local producers looking to expand their shares, harsh competition is in the offing, observers say.
In a recent interview with the Tuoi Tre (Youth) newspaper, Ngo Quy Linh, legal manager of Anheuser-Busch InBev in Vietnam, said the world’s largest beer maker will open a factory to produce Budweiser, one of its best known brands, in the southern province of Binh Duong this year end.
The brewery’s annual productivity would be 100 million liters.
Hirofumi Kishi, general director of Sapporo Vietnam, also told Tuoi Tre that the capacity of their brewery in the southern province of Long An will be increased from 40 to 100 million liters a year. The Japanese producer hopes to open more factories in the future, he said.
Early this month the Saigon Beer Company (Sabeco) began work on a brewery in the Mekong Delta province of Kien Giang with a capacity of 50 million liters per year.
Vietnam’s largest beer producer has so far invested in 24 plants across the country, 20 of which have begun operations with the total output of more than 1.8 billion liters a year, the newspaper reported.
Sabeco plans to invest in three more projects from now till next year.
Another big local producer, the Hanoi Beer – Alcohol Beverage Corporation (Habeco), owns 14 breweries with a total output of some 811 million liters a year. Its latest factory opened in the northern province of Thai Binh in 2011.
According to Kishi, although the Trans-Pacific Partnership (TPP), a US-led trade pact with the participation of 12 countries, including Vietnam, has yet to take effect, Vietnam’s beer market has already seen “quite a strong competition.”
He said the local market’s demand is “very big,” as people have a love for beer and their living standards are improving. The strong, steady growth of recent years has attracted investors, and it is possible that the market will grow by around 10 percent annually in the next few years, he added.
Figures compiled by the Vietnam Beer-Alcohol-Beverage Association show that Vietnamese people consumed nearly three billion liters of beer last year.
The association expects that the amount to go up by at least 5 percent this year, regardless of the current economic situation.
The country’s beer consumption topped the Southeast Asia region, and ranked third in Asia after China and Japan in 2012, according to Eurowatch, a market research organization.
Foreign niches
Despite being subject to an import tax of 45 percent, a special consumption tax of 50 percent and value-added tax of 10 percent, foreign beers are still able to find their niche in the Vietnamese market.
Xuan Huy, a beer importer in Ho Chi Minh City, told Tuoi Tre that there must be dozens of foreign brands that are brought into Vietnam, officially or otherwise.
Heineken, for instance, is locally produced by Vietnam Brewery Limited, but its cousins from France and Holland are still imported.
In fact, statistics from just Cat Lai, a big sea port in the southern province of Dong Nai, showed that 122 consignments of nearly 40 brands of foreign beer from countries like Czech Republic, Japan, Germany, Holland, and the US were imported in 2012, according to the newspaper.
Although the number of consignments decreased to 81 last year, there were more brands coming in, like Tsingtao of China and ICING of South Korea, it said.
The beer association’s figures showed that Sabeco’s products accounted for nearly 43 percent of Vietnam’s beer consumption amount last year, but they were mainly for the middle and low segments.
Meanwhile, Vietnam Brewery Limited, which currently produces Heineken, Tiger, and Larue, accounted for less than 22 percent but its products dominate higher-end restaurants, hotels and entertainment venues.
Tuoi Tre quoted unnamed source as saying that the company’s total output reaches a billion liters a year, surpassing Habeco to become the second largest producer after Sabeco.

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