Friday, 16 July 2010
Market structure and size
Despite the recent global financial crisis and economic recession, Vietnam’s beverage market has managed to remain a strong growth opportunity. Alcoholic consumption in 2009 was estimated at 28,034 billion VND, increasing by 4.47 percent year-on-year (approximately US$1.54 billion, falling by 5.88 percent due to the dong devaluation). Accordingly, beer sales were estimated at 2,005 million liters, increasing by 8.38 percent year-on-year. The figures for wine and spirits were 29.6 million liters (rising 6.09 percent year-on-year) and 16.5 million liters (rising 3.77 percent year-on-year), re- spectively. Although there are no official figures for soft drink sales in Vietnam, it is expected that soft drink consumption in the market is moving in the same positive direction as the alcoholic sector.
The alcoholic sector’s market structure is changing. The low-end market is contracting, as rising consumer incomes begin to erode consumer price sensitivity, according to Vietnam’s Beer, Alcohol, and Soft Drinks Association (VBA). Particularly, the high-end segment in Vietnam for brewery products, which currently accounts for 12 percent in terms of volume, and 20 percent in terms of value. Some major brands names are Heineken, Carlsberg, and Tiger. The respective figures for the middle and the low-end segments are 45 percent and 43 percent in terms of volume, and 50 percent and 30 percent in term of value.
In terms of regional patterns, the North is the biggest market for brewery products. The region consumed more than 1 billion liters of beer last year, accounting for more than 50 percent of the whole country’s consumption. Standing in second is the Southeast (including Ho Chi Minh City, Binh Duong, Binh Phuoc, and Dong Nai, with annual beer consumption of 750 million liters. On the other hand, the Southeast also had more than 50 percent of the total consumption in term of alcoholic products.
According to the General Statistics Office (GSO), Vietnam officially spent around US$32 million and US$4.5 million on importing alcohol and brewery products in 2009, respectively.
Vietnam has some 400 breweries nationwide, only 5 of which have a production capacity of over 100 million liters per annum, 15 with capacity of 15-20 million liters per annum. The rest are small provincial breweries with capacity of under 1 million liters.
A number of foreign players are present in the Vietnamese beer market, including the Danish major Carlsberg operating both alone and via a stake in Hanoi Beer, Alcohol, and Soft Drink Corporation (Habeco); the South African brewing giant SABMiller, operating in a joint venture with the local partner Vietnam Milk Corporation (Vinamilk); and the UK-based Scottish&Newcastle, with its partner Vietnam National Tobacco Corporation (Vinataba). Although S&N’s Vietnamese operation is expected to fall into the hands of Carlsberg after the Danish firm’s takeover of the UK brewery and asset split in partnership with Heineken; Heineken’s Vietnamese operation is controlled through Vietnam Brewery Limited, which is majority-owned by the Dutch brewery and the Asia Pacific Breweries Limited (APB), its regional affiliate.
However, despite the growing presence of multination- als, local firms continue to dominate the market. Among them, Saigon Beer, Alcohol, and Soft Drink (Sabeco) and Habeco control an impressive market share of 44 percent and 15 percent, respectively. In 2009, Sabeco’s revenue was estimated at VND14,956 billion, increasing by 60 percent year- on-year, with sales volume of 895 million liters, increasing by 15 percent year-on-year. The company ranked at 21st among the largest beverage corporations in the world. The respective figures for Habeco were VND 4,200 billion (an increase of 29.9 percent year-on-year) and 305 million liters (an increase of 26.2 percent year-on-year),...