The local beer market is set to face tough competition due to a rising number of foreign brewers moving into the market after Vietnam joins the Trans-Pacific Partnership (TPP), experts said.
Sabeco beer production plant (Source: tinnhanhchungkhoan.vn)
Hanoi (VNA)🦩 - The local beer market is set to face tough competition due to a rising number of foreign brewers moving into the market after Vietnam joins the Trans-Pacific Partnership (TPP), experts said.
Under the TPP agreement, Vietnam's imported beer tax from member countries will be reduced from 35 percent to 0 percent. As a result, imported beer will flood Vietnam.
Both international and local players are expected to step up marketing activities, new product developments as well as expanding distribution networks.
Sabeco is the biggest Vietnamese beer maker, with a 46-percent market share. The Hanoi Beer Alcohol and Beverage Joint Stock Corporation (Habeco) accounts for 17.3 percent of the market. And Vietnam Brewery Limited (VBL), a joint venture business between Saigon Trading Group (Satra) and Asia Pacific Breweries Ltd. (APBL) which is now Heineken Asia Pacific Pte Ltd, accounts for an 18.2 percent market share, according to Euromonitor's market report.
Sabeco holds 100 percent of the charter capital in three member businesses and long-term investments in 19 associated companies. It reported total sales of nearly 29.8 trillion VND (1.4 billion USD) and a pre-tax profit of 3.672 trillion VND (171.6 million USD) in 2014.
According to Euromonitor, in 2014, Sabeco reached the highest market share with a revenue of 30 trillion VND (1.3 billion USD) but had profit of 4 trillion VND (177 million USD) only. Profit of both Sabeco and Habeco reached 5.4 trillion VND (240 million USD) but is still lagging behind that of VBL with 6.2 trillion VND (275 million USD).
An industry insider said despite the high revenue of Sabeco and Habeco their products are still focused on the medium market segment thus leading to low profit while foreign players have used good marketing and a reasonable price strategy to bring higher profit.
According to Mikio Masawaki, the new general director of Sapporo company, the difficulty in building its brand name and advertising products was solved after its Japanese-backed beer maker Sapporo entered deeper into Vietnam by taking control of a local brewery venture with hopes of increasing its share in this lucrative market.
Sapporo International has concluded a contract to buy 29 percent of Vietnam National Tobacco Corp (Vinataba) in its Vietnamese beer venture. After the transaction, Sapporo Vietnam became a wholly-owned subsidiary of the Japanese beer maker.
Currently there are 4,000 retailers selling Sapporo products, mostly in central HCM City. The figure is expected to climb to 7,000 in February next year.
In May this year, Belgium-based brewer Anheuser-Busch InBev opened its first brewery in Vietnam. The plant, covering 100,000 square meters in the southern province of Binh Duong, will produce 50 million liters of beer a year. It said capacity will be doubled in the future. The plant will initially produce the company's global brands, including Budweiser and Beck's. The facility will help serve more than 90 million consumers in Vietnam, according to Anheuser-Busch InBev.-VNA
The food and beverage sectors have enormous potential for development with a stable annual growth rate of 7-8 percent, according to the Vietnam Beer, Alcohol and Beverage Association (VBA).
Domestic beverage companies were urged to improve their distribution system to protect their domestic market shares amid anticipated rising competition pressure.
Local beverage enterprises should have reasonable strategies on production and consumption to gain growth in the situation of high inventory at present, said experts.
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Sabeco beer production plant (Source: tinnhanhchungkhoan.vn)
