TPP to Drive Competition in Vietnam’s Beer Market
Vietnam represents a clear market opportunity for foreign beer brands. Unlike some of the other countries in the region, Vietnam has a strong culture of beer drinking. According to the Vietnam Beer, Alcohol, and Beverage Association, Vietnam is one of the region’s largest consumers of beer, ranking behind only China and Japan. In 2013, consumption levels reached 2.9 billion liters; a 2.5 percent increase year on year. The beer market has seen an average growth of 10 percent per year.
Despite their higher prices, demand for foreign beer brands has in recent years seen significant growth. In general, foreign beer costs around US$1-2, which is up to four times as expensive as local brands, such as Saigon Beer and Hanoi Beer. Drinkers are increasingly being split along economic lines in their choice of beer – Vietnamese beers tend to be drunk by those in the middle and low income classes, while the foreign brands are the clear winners in the upper end of the market.
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Supermarkets, such as Big C and Carrefour, have proven to be key distribution points for foreign beer. In many locations, foreign beer brands now dominate the shelves at the supermarkets. However, the local beers still dominate the Bia Hoi; the classic outdoor drinking venues which brew their beer daily and are frequented by both Vietnamese and adventurous foreigners.
Further signifying that competition is already heating up within the market, advertising spending by both local and foreign beer companies has seen strong growth. In addition, Vietnam’s growing online population has allowed beer companies to better target the country’s growing consumer class.
Foreign beer is not just simply being imported into Vietnam; many brewers are choosing instead to set up their operations within the country in order to make their supply chain more effective and take advantage of the government’s advantageous tax policies. For example, Anheuser-Busch InBev has announced that it will build a brewery in the southern province of Binh Duong in order to produce its leading beer Budweiser. Japanese beer maker, Sapporo, is also expanding its operations in Vietnam. It recently announced that it would expand the capacity of its brewery in the southern province of Long An from 40 million liters to 100 million liters.
Picture: Japanese beer Sapporo’s factory in Long An, Vn
Other brands that are stepping up their activities in Vietnam include China’s Tsingtao, the Netherlands’ Heineken, and Singapore’s Tiger.
This article was first published on VietnamBriefing.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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Other brands that are stepping up their activities in Vietnam include China’s Tsingtao, the Netherlands’ Heineken, and Singapore’s Tiger.
This article was first published on VietnamBriefing.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
