Vietnam's thirst for beer hard to quench

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Vietnam's thirst for beer is hard to quench, and a new production line with a capacity for 50,000 bottles an hour is the latest industry attempt to target one of the region's key markets.

VBL Danang Ltd opened the line producing Larue beer at its factory in central Vietnam on Friday.

The brew with a tiger on its label is a down-to-earth favorite in the seaside city of Da Nang.

"Vietnam... is one of the largest beer markets in Asia Pacific and of the highest growth potential," Christopher Kidd, regional director of Singapore-listed Asia Pacific Breweries Ltd (APB), said in remarks prepared for the opening ceremony.

APB and Vietnamese state-owned SATRA Group comprise the VBL joint venture.

VBL said the expansion, "to meet robust and surging beer demand", will double bottling capacity and is the latest upgrade since it bought the brewery from Australia's Foster's three years ago.

At the ceremony, Singapore's Minister for Trade and Industry, Lim Hng Kiang, said Larue is now available in most of Vietnam's provinces and showed healthy volume growth of 25 percent last year and 50 percent this year.

Along with the Da Nang brewery, VBL manages and operates three others in central and southern Vietnam. A wholly-owned unit supplies Tiger beer, Heineken and other brands in the country's north.

"Over the next 18 months, APB through its joint ventures and subsidiary, plans to invest close to 100 million dollars in capacity expansion in our various breweries in Vietnam," Kidd said.

He said APB was one of the first foreign-invested firms to enter Vietnam after the communist country began to adopt a policy of economic openness 24 years ago.

Other beer firms have kept coming.

In Da Nang, stubby bottles of the Philippines-based beer San Miguel sat on wooden tables at a roadside restaurant, hoping to tempt drinkers away from Larue or other labels.

The US brand Budweiser, among others, has moved into Vietnam, and Japanese brewer Sapporo Holdings said in December that it will enter the country from early 2012 in a joint venture with Vietnam National Tobacco Corp.

Sapporo said it will be the first Japanese brewery to build a production and marketing base in the "promising Vietnamese market which has been growing at an annual rate of more than 10 percent".

In a report last year, Spiros Malandrakis, an analyst with global market research firm Euromonitor International, said Vietnam's integration into the World Trade Organization opened up more opportunities for investment and imports from foreign companies, particularly with the government's commitment to slash tax on imported beer.

However, Malandrakis said Vietnam's domestic "economy lager" generated the strongest yearly sales increase, 10 percent in 2008.

The brewers are trying to capitalize on a beer market which Euromonitor International forecasts will continue to be one of the region's largest and fastest-growing.

Total beer sales volume at Vietnamese cafes, restaurants and other outlets grew 56 percent between 2004 and 2009 to 1.6 billion liters, the second-fastest growth rate in Southeast Asia after Cambodia.

Euromonitor International sees continued expansion of the Vietnam beer market, at 8.9 percent for 2009-10 and 5.6 percent growth by 2013-14, slightly behind Laos and Cambodia.

Vietnam's leading brewer is Saigon Beer, Alcohol and Beverage Corp (SABECO), which had up to 35 percent of national beer sales and was increasing its production, the official Vietnam News Agency reported last year.

It said Hanoi Beer, Alcohol and Beverage Corp (HABECO) had a 15 percent market share.

Earlier this month HABECO inaugurated its new Hanoi-Me Linh brewery built with an investment of more than 100 million dollars, Vietnam News Agency said.

HABECO bottles Hanoi Beer and is a major producer of the draft brew known as "bia hoi". The draft is dropped off every day at Hanoi's ubiquitous sidewalk bars which are little more than plastic chairs and a metal tank of the beer.

"In my opinion, bia hoi is the best drink," said Nguyen Duc Trung, 42, citing its relatively low alcohol content and thirst-quenching abilities in Hanoi's heat.

"I drink bia hoi every day and that's become my habit."

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