Vietnam’s beer market holds huge potential, competition

Vietnam is the holy grail for global beer companies, with the market continuing to grow while many others have flatlined, but the competition is fierce.-VNS Photo

The country’s beer market, now past the four-billion-litre mark, is expected to reach 4.6 billion litres by 2025 and 5.5 billion litres by 2035.

It has always grown at over 5 per cent even as many other markets plateaued or declined in recent years.

All these mean not only foreign investors but also large domestic companies in other sectors cast covetous glances at it.

Thai conglomerate TCC Group, after buying a majority stake in the Saigon Beer Alcohol and Beverage Corporation (Sabeco), is now eyeing shares in other brewers.

Dutch company Heineken has bought many beer brands in the country.

But experts warn that competition is brutal and not all brewers are making money.

Nguyen Van Viet, chairman of the Vietnam Beer Alcohol Beverage Association (VBA), told the media recently that many local and foreign brands like BGI, San Miguel and Foster’s have fallen by the wayside.

More than a decade ago Tan Hiep Phat Group sank $20 million in a fresh beer brand called Laser, which itself sank without a trace, he said.

Masan, a huge consumer goods manufacturer, started making a beer called Su Tu Trang (White Lion), but sales have not been very good, he said.

Selling beer in Vietnam is very hard, and only the very efficient survive, he said, pointing to the so-called ‘beer clubs’ that began to mushroom a few years ago of which many have already shut down.

Of the major brewers, Heineken, Sabeco and Tiger are prospering, while others do not make satisfactory profits, he said.

According to data from market research companies, the market is dominated by three large companies -- Sabeco, Heineken and Habeco, which have 40 per cent, 28 per cent and 18 per cent market shares.

The premium segment has enjoyed annual growth of 7.2 per cent in recent years led by Heineken, Tiger and Sapporo.

Vo Van Quang, an economist who advises many brewers, said the competition in Vietnam is harsh and even major global brands founder if they fail to sell their image to consumers.

Success depends on marketing and not just products and deep pockets, Nguoi Lao Dong (Labourer) newspaper quoted him as saying.

Japan’s Sapporo now has a firm foothold in the premium segment, and recently quadrupled the capacity of its plant to 200 million litres a year.

White Lion is gradually finding a foothold in the Cuu Long (Mekong) Delta Provinces.

According to experts, the Vietnamese market will remain attractive for many years, thus luring more new players.

Competition would thus become even fiercer, and the only way companies would succeed is by diversifying their products and popularising their brands, they said.