ABII has big thirst for local beer market

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The company has reached a Memorandum of Understanding (MoU) with Saigon Beer, Alcohol and Beverages Corporation (SABECO) for business cooperation, paving the way for the American giant to enter the local market.
“The two companies will cooperate in exchanging and sharing technical expertise in several related fields, including management, technology, distribution, marketing and brand and market development,” said ABII chief executive officer and president Stephen J. Burrows.
ABII and SABECO recognise the growth potential of the Vietnamese beer market and say the MoU provides opportunities for the two companies to explore options for further cooperation.
“After the signing of the MoU, we will discuss a market development plan. Based on the negotiation results, we will set out an investment target and cost sharing scheme,” said Nguyen Anh Dung, general director of SABECO, the largest beer maker in Vietnam with a market share of more than 30 per cent in 2003. Some of SABECO’s famous brews have been marketed overseas, including the 333 brand. The local brewer is already exporting 333 beer to the US every month through a Viet Kieu trading company. The amount is estimated to account for around 0.01 per cent of the American market share.
“[Increasing SABECO’s market share in the US] is one of the topics of discussion [between our company and ABII],” Dung said.
“We have a plan to negotiate with the [Viet Kieu] partner to double our sales [in the US] next year. However, if ABII can do market research and deliver a strong strategy, [we believe] our exports to the US will be much bigger,” he added.
Dung said in January, the two sides will meet to discuss technical support, distribution and development for marketing SABECO and ABII products. Regarding ABII’s acquisition of SABECO shares, Dung said: “Once SABECO gets the greenlight to be equitised, we will ask the government for permission to sell shares to them (ABII) under the
form of transferring [shares] to our partner. That’s just saying about selling shares. As far financial investment as concerned, they can optionally buy our shares,” he added.
Before Burrow’s visit to Vietnam in April this year, a Ministry of
Planning and Investment expert revealed that ABII was interested in aquiring a minor share in Hanoi Brewery Corporation (HABECO) or SABECO or going into a joint venture with either one of the two corporations.

“It [ABII] also wishes for seeking any suitable cooperation modality and does not plan to hold a major share in any joint venture it is to develop [in Vietnam],” the expert said, adding that ABII had claimed just a 9 per cent stake in Tsingtao, the largest brewer in China. This stake is expected to be increased to 27 per cent by 2007.

Burrows’s April visit to Vietnam was to meet with senior government and industry officials to discuss the future of the beer industry in Vietnam and how ABII could share with HABECO and SABECO their experience in management, marketing, technology transfer and other disciplines.

ABII, the number-one brewer in the US, is holding more than 50 per cent and 12 per cent market share of the America and the world respectively. ABII claims ownership of 33 famous brands, including the best seller Budweiser and the runner-up Budlight. In 2002, ABII’s sales amounted to 150 million hectolitres, turning over $15.6 billion and generating a profit of $2.9 billion. Last year, the brewer reported a total sales of $16.3 billion.

ABII’s most successful joint ventures include Grupo Modelo in which the US brewer holds 50 per cent stake. The owner of the Corona brand claims 57 per cent of beer market share in Mexico, the fifth largest beer market in the world.

ABII said it saw the future of the Vietnam’s brewing industry as very dynamic and it believed that it could play a very positive role in the growth of the industry.