The Vietnamese beer market is once again "stirred up" by a series of merger and acquisition news and announcements from the commitments in the Trans-Pacific Partnership (TPP) agreement of the countries.

Illustration photo from the Internet

The recent announcement by the Sapporo beer group from the land of cherry blossoms that it had "bought out" Vietnam's capital contribution in the Sapporo Vietnam (SVL) joint venture shows that the Vietnamese beer market is always hot with the relentless attack of foreign beer companies. Moreover, after declaring full ownership of SVL, speaking to the press at the announcement of changing the packaging identity of some products, a representative of the Sapporo Group (Japan) also said that the company will boost sales through a strategy of expanding its distribution network across the country. Currently, the group's factory is located in Long An and is also the only factory of the company supplying beer to the markets of Southeast Asia, Korea and Australia.

lucrative market

Before the Sapporo deal, the news that the Ministry of Industry and Trade was determined to accelerate equitization and divestment of state capital from Saigon Beer Alcohol Beverage Corporation (Sabeco) also caused a stir in the stock market. According to the plan, of the 89% of Sabeco shares that the state currently owns, a maximum of 53% of the capital will be sold to strategic investors. Immediately, Thai Beverage Company announced that it would buy this capital for nearly 1 billion USD, and Singha Bia, also from Thailand, also said it wanted to become Sabeco's strategic partner. Not only that, a series of foreign beer companies such as: Asia Pacific Breweries, Sabmiller, Asahi Breweries, Kirin Brewery... all spoke up in the market that they wanted to become Sabeco's strategic partner.

Talking to Thanh Nien, Mr. Mikio Masawaki, General Director of SVL did not hide his ambition to continue researching and launching new products in Vietnam because the market still has potential due to the average age of young consumers who love new, modern products. In the next 10 years, the middle class in Vietnam will also increase 2-3 times and the ambition of this group is to make Sapporo's revenue in the Vietnamese market account for 50% of the group's foreign revenue in Japan.

On the other hand, according to Nikkei, after the Japanese Ministry of Foreign Affairs announced a program to cut 81% of agricultural product taxes, the two beer markets that Japanese companies are expecting are Vietnam and Malaysia. Similarly, assessing the opportunities from TPP, on some media channels, representatives of the American Beer and Wine Association also said that Vietnam is the market with the biggest opportunity among the 12 markets in the TPP bloc that American beer and wine traders expect. With TPP, according to the commitment, Vietnam will also gradually reduce the tax on beer from 35% to 0% according to the 11-year roadmap. According to the forecast of the Vietnam Beer, Alcohol and Beverage Association (VBA), the price of imported beer will certainly decrease sharply after TPP.

Previously, last May, Anheuser-Busch Inbev (AB InBev), the world's leading beer company from the US, inaugurated a beer factory with a capacity of 50 million liters per year in Binh Duong. According to the plan, this beer company will increase to 100 million liters per year in the next phase. According to the representative of AB InBev, the company's products will serve the Vietnamese market, and be exported to India, Laos, Cambodia and the Philippines. "The competition from the domestic market is currently quite large and fierce. We cannot yet conclude how much the production cost will be reduced, but after TPP, there will certainly be a change in the price of beer products in general," the representative of the foreign beer company in Vietnam predicted.

Take advantage of the internal distribution system

In fact, the name Sabeco is too hot in the beer market, which is understandable, when this brand currently occupies up to 46% of the market share. According to information from VBA, in 2014, the total amount of beer produced and consumed nationwide is estimated at 3.14 billion liters, an increase of 8.1% compared to the previous year. In 2015, this number is forecast to continue to increase to about 3.3 billion liters. According to VBA's report, Vietnam currently ranks 5th out of 10 Asian countries in terms of average beer and alcohol consumption, just behind Japan, Korea, Thailand and China.

According to strategic consultant Robert Tran, General Director of Robenny, in charge of the Asia-Pacific and US regions, in the wave of forecasts that many foreign investors will enter Vietnam to take advantage of the TPP, strategic investors in the fast-moving consumer goods sector are indispensable. Because the Vietnamese market is currently extremely attractive thanks to the plan to divest state capital from lucrative cakes in the beer, milk, food industries... And Sabeco or Habeco are both considered delicious cakes in this "basket" of equitization. "Like the retail industry, buying a large number of shares of domestic beer companies to immediately enter the market is the strategy that foreign corporations are aiming for. Not only owning dozens of breweries with large capacity, the real estate volume of domestic beer companies is also a large enough asset to attract foreign investors," Mr. Robert Tran analyzed.

For new investors, according to Dr. Nguyen Van Thuan, University of Finance - Marketing, the difficulty that often occurs for foreign investors is building a nationwide distribution channel. Meanwhile, domestic beer brands already have strengths in distribution. At the same time, with the current movement of prioritizing and supporting the use of Vietnamese goods, domestic brands have more advantages and thanks to that, sales have also increased. “Buying factories in localities to develop faster. In addition to the ability to manage and operate, the transportation problem... foreign investors can easily reduce costs and increase their profits. In particular, buying a large proportion of shares of average beer brands with factories in provinces and cities to gain control will be easier to do. Therefore, the competition between some large domestic brands such as Sabeco, Habeco and foreign investors will continue to be fierce,” said Dr. Thuan.

According to Thanhnien online