Despite the slowdown in investments
on the back of the global financial crisis, the Vietnamese drinks sector
continues to attract investments from international players, according to a
report by companiesandmarkets.com, a website providing market reports and
company specific information to market research buyers worldwide.
According to the report, a number of major global brewers recently announced
fresh investments into the country’s beer sector, as competition continues to
heat up.
In November 2009 Danish brewing giant Carlsberg announced plans to acquire
the remaining 50% stake in Central Vietnam's
Hue Brewery as part of its objective to strengthen its position in the
Vietnamese beer market. Carlsberg had originally purchased a 50% stake in the
Vietnamese brewery in 1994 through a preliminary agreement with Hue People's
Hue Committee. This most recent acquisition will provide Carlsberg with a
stronger presence in Central Vietnam where Hue is the market leader through its Huda
brand. As Vietnam's
beer market grows, in line with the country's rapid economic development, a
nationwide presence is becoming an essential requirement for the leading
players.
Demand is no longer coming out of the two major urban centres of Hanoi and Ho Chi
Minh City, as incomes and tourism levels are rising in
city centres across the country. If a brewer is to fully exploit the country's
attractive beer market, it must have access to more than two or three
profitable cities, hence this move by Carlsberg.
This was followed by the announcement in late December by Japanese brewer Sapporo that it had acquired a 65% stake in Kronenbourg Vietnam, the
Carlsberg and Vietnam National Tobacco Corporation (Vinataba) 50:50 joint
venture (JV). The US$25.4mn deal will see Sapporo
take full ownership of Carlsberg's stake and 15% of Vinataba's interest. Sapporo has already confirmed
that the construction of a new brewery will be among its first priorities upon
completing the acquisition. This investment in capacity expansion will be
important if Sapporo is to compete effectively
in Vietnam.
The local beer market is very competitive, with market leaders already
established in Saigon Beer Alcohol and Beverage Corporation (Sabeco) and Hanoi
Beer Alcohol and Beverage Corporation (Habeco), while several powerful
multinationals, including Heineken's JV Asia Pacific Breweries, as well as
Carlsberg, have also already emerged as major players, the report says.
Bearing in mind the competitive business environment, Sapporo has been moderate in its market share
aims, with the new JV targeting just 3% of the market by 2019, and yet even this
will require significant financial support given the sums its rivals are also
pumping into local growth. Given the vast potential of the local market, it is
easy to see why. Vietnam
is considered to be one the world’s highest-potential beer markets, with growth
fuelled by economic expansion and a growing tourism sector.
With competition set to increase further as the market continues to open up
to foreign investors, those brewers already present in the market can be
expected to ramp up investment levels in order to secure a strong foothold,
according to the report.
