Beer sales up 10 percent in 2015 amid rising competition

Same procedure every year. The announcement of annual beer production figures in Vietnam is usually accompanied by a bit of cacophony from the nomenklatura, some calling for further privatisations of the state-owned breweries with others reject such claims.

In 2015, Vietnam’s beer production grew about 10 percent to 34 million hl. The state-controlled Sabeco continued to lead with 14 million hl beer, followed by Heineken’s Vietnam Brewery with 7.2 million hl, the state-owned Habeco with 6.7 million hl and Carlsberg with 2.3 million hl. These four brewers accounted for 88 percent of the market, it was reported.

What must have been worrying for the communist rulers is that last year the state-controlled breweries underperformed the general market. Their beer production was up, but their market shares decreased.

Sabeco only saw a 2.2 percent growth in output last year, while Heineken’s unit surpassed Habeco to become the number two brewer in terms of output.

Beer is a strategic industry in Vietnam, as it contributes around 3 percent to the country’s GDP, officials say.

Hence there have been renewed calls, both from the communist party and from foreign brewers, for the state to sell down its stakes in Sabeco and Habeco.

After Sabeco’s IPO eight years ago, the state still owns a controlling 89.59 percent in the company and there have been plans to unload over 51 percent of Sabeco’s equity. Nothing has come of this yet. The Dutch brewer Heineken is currently the only foreign shareholder in Sabeco with a five percent stake.

But in an effort to pre-empt such plans, Sabeco said on 26 December 2015 that it will not sell a major stake to overseas investors, even if foreign companies, including two Thai tycoons, are vying for ownership in the state-owned brewer.

In November 2014 Thai Beverage, the maker of Chang beer, approached the Vietnamese government with a USD 2 billion offer for Sabeco, but was rebuffed.

Perhaps more troubling for Sabeco, on 25 December 2015, the Singha Group, a Thai conglomerate that produces the namesake beer, bought stakes valued at USD 1.1 billion in the Masan Group, Vietnam’s largest private-sector company with interests ranging from beer to consumer foods to banking and resources. Singha will take a 25 percent stake in Masan Consumer Holdings and another 33.3 percent stake in Masan Brewery. In December Masan opened a 1.0 million hl brewery in the Mekong Delta near Saigon, which produces beer under the brand name Su Tu Trang.

In May 2015 AB-InBev started production at its brewery in the southern province of Binh Duong, with an annual capacity of 500,000 hl beer. The company is going to increase its output to 1.0 million hl per year and is now aggressively advertising on TV.

Imports of beer have also increased in recent years, despite the government raising tariffs.

Whether the two state-owned breweries will be able to grow in sync with the beer market, which is projected to rise to 40 million hl by 2020, is an open question.