With sales reaching billions of USD and continuously growing strongly year by year, Vietnam is becoming an attractive beer market that makes both domestic and foreign businesses stand to fight. However, there are many signs that the victory is tilting towards foreign brewers.
In just a very short time, Heineken has continuously introduced two new beers that directly hit the high-end segment. At a new beer launch, Mr. Alexander Koch, Commercial Director of Heineken VN, once said the company put its oldest beer brand in Vietnam before introducing it to regional countries. This is not too difficult to understand because of the attractiveness of the Vietnamese beer market. A recent study by market research firm Statista shows the optimism of the Vietnamese beer market. Accordingly, the total revenue of Vietnam beer market is forecasted to reach USD7.7bn in 2019. In addition, the annual growth rate of Vietnam beer market will increase by 5.6% in the period of 2019-2023. This means that Vietnamese will pay USD9.6bn to drink beer in 2023.
According to Nielsen – a market research firm, by 2020, the average population size will increase three times compared to 2014. This positive signal means that Vietnamese people will spend stronger for products that show class and social status. Therefore, consumption of imported beer products with high prices and good quality is expected to continue to increase in the coming years. This attraction is so great that a trading company named Thien Nam, which has never been a beer trader, recently announced that it has jumped into the beer market by importing high-end beer from Spain with its initial investment more than 100 billion. Thien Nam expects after three years to gain 0.3% market share of premium beer with net profit of 37 billion dong.
Although there are dozens of beer brands on the market today, more than 90% of the market share belongs to big players like Sabeco, Habeco, Carlberg and Heineken. In particular, Sabeco and Heineken alone are two big players in the market with more than 60% market share. This shows that the beer market is not easy to take but fierce competition. For example, Habeco, a big guy in the beer market but started to show signs of decline. The company is considered to be capable of confronting foreign beer firms because the Ministry of Industry and Trade is holding 81.79% shares in Habeco.
Last year, Habeco’s revenue and NPAT reached VND9,100bn and VND498bn respectively. This figure has declined quite a lot, especially NPAT lost VND150bn. Habeco leaders acknowledge that the North and Central markets, the two main markets of the company, show signs of decline in the context of Sabeco and Heineken strongly attacking these markets. For example, in these areas, Sabeco grew 32% with Saigon Lager and 333 products while Heineken VN grew with Tiger products at a rate of up to 71%.
However, not only Habeco but also Sabeco, the leader in the beer market, also see great competitive pressure, especially from the second-ranked competitor, Heineken. Sabeco’s management said that despite increasing market share in rural areas, there is strong competition pressure in urban areas. Therefore, to increase market share, the company must regain its position in urban areas.
Financial and securities expert Tran Dinh Phuong recognized that although the beer market is expected to grow strongly in the coming years, it is not simple to enter this market. In this fierce battle, only the investment units based on the value chain from materials, logistics to distribution systems, along with strong financial resources for new marketing strategies to win in this race.
Market research firm Statista (Germany) said that this year alone, if calculating per capita revenue, each Vietnamese person drinks an average of USD79.55. In a unit by liter, the Vietnamese people will drink 4.6bn liters, equivalent to 47.6 liters per person in 2019 and 5bn liters by the end of 2023.
Looking at the profit structure, it can be seen that brewing companies are benefiting greatly from increasing market capacity and increasing consumption of beer. Recently Thaibev Group (Thailand), which owns 53.59% of Sabeco, said Sabeco made a great contribution to the company’s business results. For example, last year, revenue and NPAT of Sabeco reached over VND35,000bn and VND 4,100 bn, which help Thaibev Group to collect thousands of bn dong in dividend.