Figures on beer and alcohol consumption make Vietnam an attractive market for international beverage companies.
Vietnam’s beer market has long been attractive in the eyes of global giants in the industry, with many finding a great deal of success, such as Heineken, which dominates the premium beer market, while Sapporo, after just a few years in the country, has become more widely known. There have also been a few failures along the way as well, such as Foster’s, which sold all of its breweries and left the country, while the likes of Zorok and Miller have all but disappeared.
Vietnam is ranked fifth in Asia in terms of beer consumption with an annual per capita figure of 31.7 liters, according to a report from the Vietnam Beer Alcohol Beverage Association (VBA) released in May. Japan leads the way, with 44 liters, followed by South Korea with 38.7 liters, Thailand 38.1 liters, and China 37.3 liters, while the Philippines has the lowest consumption in the region, with 16.7 liters.
In “pure alcohol” terms, annual per capita beer consumption stands at 6.6 liters, which unlike the figure specifically for beer consumption puts it quite close to its regional peers, with Japanese consuming 8 liters per year each, Laotions 7.3 liters, and Thais 7.1 liters.
According to Mr. Nguyen Van Viet, Chairman of VBA, talk of Vietnam having among the highest rates of beer consumption in the world is incorrect. Consumption is in the mid-range compared with elsewhere in the region, while in pure alcohol terms consumption is the sixth-highest in Asia.
In another report released by General Department of Preventive Medicine under Ministry of Health (MoH), beer and alcohol consumption is said to have doubled over the last five years.
The consumption of all alcoholic beverages among Vietnamese people aged over 15, according to the report, increased from 3.8 liters per person annually in 2005 to 6.6 liters in 2010. On average, every Vietnamese person aged over 15 consumes 37.7 grams a day in pure alcohol terms. And with total consumption rising from 2.8 billion liters in 2012 to over 3 billion liters in 2013, Vietnam is on its way to becoming the third-highest alcoholic beverage market in Asia.
The VBA report said that over the next five years, to 2020, total production and consumption of beer will be 4.5 billion liters, an increase of about 1.3 billion liters. Consumption of spirits will reach 350 million liters, an increase of 8.8 million liters. The report added that Vietnam is among the Top 25 largest alcoholic beverage markets in the world.
Fight for share
There are about 120 breweries around country, but over the last two years growth in the beer industry has slowed to less than 10 per cent. There are three companies accounting for 80 per cent of the market: the Sai Gon Beverage Joint Stock Company (Sabeco), the Hanoi Beverage Corporation (Habeco), and Vietnam Brewery Ltd. (VLB), with the most popular brand being Heineken, according to Mr. Duong Dinh Giam, Director of the Industrial Policy and Strategy Institute.
The major reason why Sabeco and Habeco still hold a large market share is their close relationships with restaurant owners and their long history, both of which enable them to compete with foreign giants.
The premium beer market seems certain to change with the arrival of AB InBev’s brewery, with a capacity of producing around 100 million liters per year of Budweiser and Beck’s. “Vietnam’s population keeps on rocketing and the middle and upper classes are expanding at a fast pace as well, leading to rising demand for premium consumer goods, including beer,” said Mr. Ricardo Vasques, Managing Director of AB InBev Vietnam. “People also prefer new consumer choices that can offer them a new and unique experience.”
Mr. Hirofumi Kishi, General Director of Sapporo Vietnam, agrees that premium beer is in great demand in Vietnam and the company expects that over the next ten years the country’s middle class will double or triple and the premium beer market will subsequently continue to rise.
Many people, he went on, consider premium beer to be the preserve of high-income earners, while Sapporo views the concept as being related to where it is consumed. “In Vietnam it’s common for family or friends to get together and on such occasions a premium beer is preferred,” he explained. “Premium beer is also a better gift than regular beer.”
Regarding the competition in Vietnam’s beer market, Mr. Vasques said it also opens doors to amazing opportunities. He has faith in the company’s heritage and the popularity of Budweiser in Vietnam has been proven over the last few years.