Vietnam: Vietnam’s craft beer industry growing both in size and reputation

Across Districts 1, 2, and 3 of Vietnam’s Ho Chi Minh City, it’s easy to find craft beer breweries with operational capacities comparable to those in Western countries, the Vietnam Briefing reported on November 2.

Some 30 brewers have set up in Vietnam, welcoming a healthy flow of customers both pre and post-pandemic.

Vietnam is also home to the headquarters of award-winning brewer, Pasteur Street Brewing Company, with its reputed Marou cocoa pod-infused Cyclo Stout listed a must-try by Life and Travel Asia.

Indeed, Vietnam’s craft beer industry is growing not only in size but also reputation.

Vietnam’s beer consumption as of 2022 was 2.2 percent of the global market, at 3.8 million kilolitres of beer annually. This has made it the leader in the ASEAN region for beer consumption.

Key players dominating the market include both domestic and international brands like Heineken, Carlsberg, Sapporo Breweries, Hanoi Beer Alcohol and Beverage Corp. (Habeco), and Saigon Alcohol Beer and Beverage Corp. (Sabeco).

That is not to say there isn’t room for more made-in-Vietnam craft beers.

On the contrary, the Vietnamese craft beer market is not only booming but also injecting the industry with its own special taste of home.

Craft beer recipes in Vietnam have evolved in every kind of way due to Vietnam’s geographical advantages.

Vietnam is home to a multitude of spices and fruits, which have been extensively used in craft beer recipes, ranging from lemongrass, passion fruit, and beetroot to coffee and cocoa.

This means brewers in Vietnam are less dependent on imported ingredients, thereby reducing input costs and allowing for more competitive prices.

The infusion of local produce has also set craft beer brewers in Vietnam apart from their competitors elsewhere.

For example, the 2021 Asia Beer Championship cemented Vietnam’s position in the regional craft beer market, with four gold medals, equaling Singapore.

The country is also known for a more relaxed legal environment for craft beer brewers as they are allowed to produce craft beers in small batches. This is as opposed to Thailand which requires brewers to produce in quantities of at least 10,000 liters annually. As a result, many small-scale Thai brewers have shifted their production to Vietnam where an output of as little as 1,000 liters is allowed.

There is also the ease with which craft beer can be shipped from Vietnam to Thailand. With its geographical proximity and improved logistics, Vietnam is an optimal choice for brewers looking to legally produce in Vietnam in small batches and then export to Thailand.

Another key factor is Vietnam’s well-educated customer base. Generation Z in Vietnam keeps itself up to date with global trends, especially elite experiences like wine and craft beer tasting. They are eager to learn just how their drinks are made – an on-site experience that is common among craft beer breweries.

Beer is now less of a commodity and more of a culture among young generations of Vietnamese, which make up the bulk of the population.

The “nhau” (intensive beer drinking at gatherings) is seen among 20, and 30 year olds on a lesser frequency. Drinking to become intoxicated is no longer the main purpose of consuming alcohol now that ‘tasting’ has caught on.

Middle-income consumers are also becoming pickier when it comes to food and beverages and the unique recipes and on-site brewing of domestic craft beers, is particularly enticing to this new breed of quality conscious consumers.

Recently, the government issued Decision 508/QD-TTg on 23 April, specifying that there would be a roadmap for increasing the special consumption tax (SCT) on beer and alcohol products by 2030.

This could lead to the imposition of a higher tax rate on some alcoholic beverages. Currently beer attracts a SCT tax rate of 65%.

A higher tax imposed on craft beer will drive prices up, posing profit concerns for brewers.

However, it may also spur a trading-up effect: at a higher price, craft beer may be seen as a premium or luxury product, thus ramping up its perceived value.

Even though the beer market in Vietnam is dominated by major players like Sabeco, Habeco, Heineken, and Carlsberg, craft beer still has its own piece of the pie – a piece that is rapidly expanding.

This is driven by the availability of unique produce, prime conditions for craft beer brewing, and changing attitudes among young Vietnamese.

Many consider the boom of craft beer in Vietnam a fad – easy come and easy go.

However, it is more likely that this is just the beginning.

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