Vietnam: Many foreign investors still face problems in Vietnam’s promising beer market

With 4 billion litres of beer consumed every year, Vietnam’s market is a promising one for investors. However, many of them have faced problems, VietNamNet Bridge reported on July 7.

Under a development strategy by 2020, Vietnam’s beer industry would have output of 4.1 billion litres by 2020, 4.6 billion by 2025 and 5.5 billion litres by 2035.

However, consumption exceeded 4 billion litres in 2017. The Vietnamese market has maintained a 5 growth rate, while other markets have been flat.

TCC from Thailand, after acquiring Sabeco, is still eyeing other brewers. Heineken is both maintaining growth and expanding business to own more brands.

Nevertheless, while the beer market is attractive, it is also risky. Nguyen Van Viet, chair of the Vietnam Beer Alcohol Beverage Association (VBA), said many brewers, both Vietnamese and foreign, including big players such as BGI, San Miguel and Foster, have quietly left the market.

Vinamilk has decided to give up the brewery division by selling the brewer and Zorok brand. Tan Hiep Phat has given up Laser fresh beer after spending $20 million within two years to develop the brand. Most recently, Masan spent big money on Su Tu Trang, but the business has not prospered.

According to market analysis firms, the Vietnamese beer market is controlled by three biggest players – Sabeco, Heineken and Habeco — which hold 40 percent, 28 percent and 18 percent, respectively.

However, the low end market segment has seen growth slowing down to 3.7 percent.

Meanwhile, the high-end market segment dominated by Heineken, Tiger and Sapporo has grown by 7.2 percent.

Vo Van Quang, a branding expert, commented that the Vietnamese market is so competitive that even some famous brands cannot exist in Vietnam. He thinks success is determined by marketing know-how, and is only dependent on financial capability or product formula.

“Enterprises fight over market share in all distribution channels, from restaurants to pubs, but the market segment and professional branding will decide who will succeed,” he said.

Sapporo has cemented its position in the high-end market segment. Its products have become popular in the suburbs. The investor from Japan raised its capacity from 50 million litres in the first phase to 200 million litres.

Su Tu Trang beer, after entering western provinces of the southern region, is planning to march towards the north. Dai Viet and Huda have been prospering thanks to wide positioning.

The north was the ‘home market’ for Habeco. However, amid the strong rise of big rivals, Habeco is losing the northern market. Its market share decreased from 18.9 percent in 2016 to 16.2 percent in 2017.

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