Heavy competition behind the allure: Vietnam’s beer market

May 23rd at 13:41
23-05-2018 13:41:54+07:00

Heavy competition behind the allure: Vietnam’s beer market

The Vietnamese beer market is considered a promised land for both foreign and local brewers due to the massive consumption. However, in reality, it is a playground with strict competition.

 

According to statistics from Euromonitor, the global beer consumption volume remains unchanged since last year, while beer consumption in Vietnam soared. Notably, in 2008, Vietnam ranked 8th in Asia in terms of the volume of beer consumed, however, after eight years, Vietnam now stands at the third position, following Japan and China.

According to statistics from Viet Capital Securities, the Vietnamese beer sector is dominated by four brewers, namely Habeco, 100 per cent Carlsberg-owned Hue Brewery, Sabeco, and Heineken NV. These four entities hold 90 per cent of the market, while the remaining 10 per cent is divided among Masan Brewery, Sapporo, AB InBev, and Calsberg-owned Southeast Asia Brewery.

While Habeco, Hue Brewery, and Sabeco dominate the market in the northern, central, and southern regions, respectively, Heineken NV holds dominion in the high-end and medium beer segments.

According to a report of the Vietnam Beverage Association, in 2017 Vietnam sold four billion litres of beer, equalling an average of 45 litres per people per year. Besides, Vietnam set the target the output of 4.1 billion litres of beer by 2020 and 5.5 billion litres by 2035.

Despite the beer sector having great potential to exploit, only a number of brewers are operating at massive profits.

According to enternews.vn, Nguyen Van Viet, chairman of VBA, stated that despite Japanese brewer Sapporo seeing an increase in sales volume, the production expenses as well as the advertisement programmes reduced profit heavily.

Additionally, numerous players failed in this playground and had to leave. Notably, in July 2006, Asia Pacific Breweries bought two Vietnamese breweries from Foster's Group in a deal worth $105 million.

Besides, SABMiller co-operated with Vinamilk to establish a $45-million joint venture to develop a brewery in the southern province of Binh Duong. The brewery was expected to start operations in 2007 with the initial capacity of 50 million litres per year.

The capacity was expected to double if the plant goes well. However, the joint venture faced difficulties in competing with existing beer products. As a result, Vinamilk had to transfer its entire holding in the joint venture to SABMiller after only two years.

In October 2015, AB InBev spent $106 billion on acquiring SABMiller's global operations, including SABMiller in Vietnam. At present, SABMiller's products just make up a small portion of the market in the domestic beer sector.

In spite of massive spending on advertisements, Habeco reported decreases in both revenue and profit in the first three quarters of 2017.

According to the corporation’s financial report in the third quarter of last year, Habeco earned VND3 trillion ($131.8 million) in revenue and VND317 billion ($13.9 million) in after-tax profit, signifying decreases of 18 and 27 per cent, respectively, the greatest plunge during the year.

Notably, in the nine months of last year, Habeco’s revenue decreased to VND7.2 trillion ($316.3 million) and after-tax profit decreased by 17 per cent, to VND613 billion ($26.9 million).

According to the 2017 consolidated business results, Habeco reported a net revenue of VND9.8 trillion ($430.4 million), a decrease of 2 per cent on-year and a decrease of 4.9 per cent in pre-tax profit to VND972.6 billion ($2.7 million).

vir



NEWS SAME CATEGORY

Gov’t asked to help automakers overcome difficulties

Auto businesses are concerned about Viet Nam’s future policy orientation with regard to the auto industry, which they think will affect their business strategy.

Kyoei Steel cancels expansion project in northern Vietnam

Kyoei Steel from Japan recently announced that it had cancelled the expansion of its steel plant in the northern province of Ninh Binh in order to focus on...

Missing investors’ projects face official termination

The investors have disappeared at a string of foreign investment projects, prompting authorities to officially terminate the projects in the forthcoming period.

HCMC boosts supporting industries

HCM City is enacting policies to aid businesses in the supporting industry by encouraging investment, networking between firms and banks, and creating special zones.

Deputy PM urges AES Corporation to develop Son My 2 thermal power project

Deputy Prime Minister Vuong Dinh Hue’s urging AES Corporation to implement the Son My 2 gas-fired thermal power project shows Vietnam’s wish to increase investment...

Hoa Sen puts up steel construction pipe plant in Yen Bai

Steel maker Hoa Sen Group on Friday inaugurated a plant that can produce 60,000 tonnes of steel construction pipes annually in the northern province of Yen Bai.

EVN ensures stable electricity supply

HCM City is expected to have a stable electrical supply during the summer, according to the HCM City Power Corporation (EVN HCMC).

VN farm products export to Thailand

Wholesale supermarket MM Mega Market Vietnam has exported more than 100 tonnes of Vietnamese agricultural products to Thailand for selling through 700 Big C malls...

MM Mega Market Vietnam promotes domestic agri-products via Big C Thailand

In the first quarter of 2018, MM Mega Market Vietnam exported the first batch of more than 100 tonnes of Vietnamese agricultural products to 700 Big C malls in...

Petrolimex, JCCP ink second-phase co-operation deal

Vietnam National Petroleum Group (Petrolimex) and Japan Cooperation Centre Petroleum (JCCP) signed an agreement for the second phase of a technical project on...


MOST READ


Back To Top