Foreign brewers strengthening foothold in VIetnam beer market

Competition is getting tougher for domestic brewers as foreign rivals are increasing their share of the country’s output.

Last year, both Saigon Beer-Alcohol-Beverage Joint Stock Corporation (Sabeco) and Hanoi Beer-Alcohol-Beverage Joint Stock Corporation (Habeco), the biggest brewers in Vietnam in terms of output, saw a marked decrease in their share of the country’s beer market.

The Vietnam Beer Alcohol Beverage Association (VBA) estimated that Vietnam’s beer output was 3.4 billion litres in 2015. Sabeco continued to be in the lead with 1.38 billion litres, followed by Vietnam Brewery Limited with 720 million litres, Habeco with 667.8 million litres, and Carlsberg with 229 million litres. These four brewers accounted for 88.4% of the market.

Sabeco saw a 2.2% growth in output last year, while the whole sector’s output grew by 8.2%, from 3.14 billion to 3.4 billion litres. Meanwhile, Vietnam Brewery Limited surpassed Habeco to become the second in terms of output.

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Former Sabeco chairman Phan Dang Tuat said competition had become very fierce, with brewers competing at each sales point in big and small cities alike. 

A few years ago Tuat enlisted a foreign marketing expert to help Sabeco recover 800 sales points. Two years later the expert returned to Vietnam Brewery Limited. Tuat said the expert could now earn between US$4,000 and US$5,000 at Vietnam Brewery Limited compared to the VND40-VND50 million (US$1,900-US$2,300) at Sabeco. 

“But more importantly, foreign companies are very determined and fast in expanding their market shares while domestic companies are slower,” he said.

Besides foreign brewers that have been present in the market for a long time, new players such as Sapporo, AB-InBev, and Thai brewer Shingha, through its 25% ownership in Masan Consumer Holdings, are expanding aggressively. 

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Sapporo recently bought all of Vinataba’s stake in their joint venture to make it wholly foreign owned, showing the Japanese firm’s commitment to the Vietnamese beer market. Afterwards it changed the packaging and is now expanding its distribution chain.

AB-InBev in May started production at its factory in the southern province of Binh Duong, with the annual capacity of 50 million litres. The company is going to increase its output to 100 million litres per year and is now aggressively advertising on TV at prime hours. 

Meanwhile, Masan Brewery HG started production at its 100 million-litre brewery in the Mekong Delta provinve of Hau Giang last December.

According to VBA data, as of the end of 2015 Vietnam had 129 beer production facilities, down 12 compared to 2010, but the number of factories with the annual capacity of between 50 and 100 million litres has increased. The capacity of the whole sector is now 4.8 billion litres per year.

VBA president Nguyen Van Viet said sales grew by 4.7% on-year in 2015, but the rate of growth is smaller than in previous years. The association predicted that in the next ten years sales would be around 5 billion litres. Draught beer, which now accounts for 1% of the market and is sold at retail points and restaurants, is expected to grow well in the near future.

VIR