Foreign brewers boost foothold in Vietnam’s $3B beer market

Minh Tam

14:09 08/10/2015

BizLIVE - Transnational producers are increasing their presence in Vietnam’s three-billion-USD beer market with large growth potential as the nation is seeking to deepen global integration via free-trade agreements.

Foreign brewers boost foothold in Vietnam’s $3B beer market

Major products of Sabeco, Vietnam's largest brewer. (Source: Internet)

Japan’s Sapporo International Inc. has spent 8.28 million USD on acquiring a 29% stake in Sapporo Vietnam Co. Ltd. (SVL) from state-owned Vinataba, its joint-venture partner, making the brewing company its wholly-owned subsidiary, according to Nikkei Asian Review.
After fully owning the Vietnam unit, Sapporo International Inc. plans to re-launch its locally brewed, full-bodied Sapporo Premium beer by giving it the lighter, crisper taste that Vietnamese prefer, aiming to gain a larger share in the local beer market.
SVL is eyeing an expansion of its network of vendors to Hanoi, the central city of Da Nang and other localities country wide to 7,000 restaurants and shops selling Sapporo Premium by the Tet Lunar New Year holiday next February from around 4,000 presently, mostly located in Ho Chi Minh City.
After the deal was announced, analysts reckoned more merger and acquisition (M&A) deals will be struck in the beverage sector this year or next year as state giants have to divest from non-core businesses.
Besides Sapporo, a large number of famous brewers are seeking to step up their footprint in Vietnam, with the prime target of dominating the market, especially in the middle-end segment which is now controlled by Saigon Beer, Alcohol and Beverage Corporation (Sabeco) and Hanoi Beer Alcohol and Beverage Joint Stock Corporation (Habeco).
As the government has unveiled a plan to unload up to a 53% stake in Sabeco, the largest brewer in the country, to as low as 36%, at least nine overseas brewers including SAB Miller, Kirin Brewery, Asahi Breweries, Asia Pacific Breweries and Heineken have aired interest in buying a majority stake in the firm, which now holds a 46% market shares with two star brand names 333 and Saigon.
Thai Beverage (ThaiBev), owned by Thailand’s third richest man Charoen Sirivadhanabhakdi, earlier this year offered to buy a 40% stake in Sabeco for around one billion USD. The offer gives Sabeco a price tag of roughly 2.4 billion USD. Singha Beer, another Thai brewer, has also expressed hope to buy Sabeco shares.  
Sabeco, which holds the lion’s share in the local market and has continuously reported hefty profits, is considered a ‘crown jewel’ for overseas investors. Owning a stake in Sabeco will allow foreign partners to enter the market immediately, according to the Saigon Times newspaper. In addition, they will have access to some 20 brewing plants across the country with a combined capacity of 1.8 billion liters per year and a wide portfolio of real estate in large cities.
Anheuser - Busch InBev Vietnam, a unit of the Belgium-based brewer Anheuser-Busch InBev, on May 21 put into operation its first beer plant in the southern province of Binh Duong, the first plant in the Southeast Asian nation with a cost of $26 million. The plant is designed to produce 50 million liters of beer annually for domestic consumption and export in the first phase and 100 million liters later. It will initially produce the company’s global brands, including Budweiser and Beck’s.
According to the Vietnam Beer, Alcohol and Beverage Association (VBA), the beer output and sales volume in Vietnam increased 8.1% year-on-year to 3.14 billion liters in 2014. The volume is forecast to reach 3.3 billion this year, making it’s the largest beer market in Southeast Asia.
Meanwhile, Nikkei cited Euromonitor, a UK-based research company, as saying that Vietnam’s beer market measured just 3.41 billion liters in 2014 but is projected to grow about 40% by 2019.
As Vietnam is a party to the U.S.-brokered Pacific Rim trade deal, the import tariff of bear in the country will be cut to zero from 35% once the agreement takes effect.