2010-03-09 15:47:02 -
Vietnam Food and Drink Report Q2 2010 - a new market research report on companiesandmarkets.com
www.companiesandmarkets.com/Summary-Market-Report/vietnam-food-a ..
Despite the slowdown in investments on the back of the global financial crisis, the Vietnamese drinks sector continues to attract investments from international players. As discussed in our recently published Vietnam Food & Drink Report for Q210, a number of major global brewers recently announced fresh investments into the countrys 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.
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 worlds 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.
