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Quality, not quantity

Released at: 15:42, 13/11/2017

Quality, not quantity

Photo: Viet Tuan

Craft beer brewers are trying to shape a new culture among Vietnamese drinkers.

by Huong Do

The sound of “1, 2, 3, Zo” rings out at bia hoi establishments around Vietnam every day and night. Bia hoi, or local draft beer, has been the most popular drink among Vietnamese people, especially in the north, for many, many years but a challenge has been thrown down in recent times, by craft beer. 

The craft beer industry has been booming in the West for a decade. It arrived in Vietnam just a few years ago via some foreigners testing the waters with their own locally-made equivalent. Craft beer, it’s said, expresses the personality and style of the master brewer and the brewery where it’s made. Production scale is usually quite small, with different tastes coming from master brewers creating his or her own formulas, in which more or less ingredients are added to create a unique flavor. This requires the brewer be constantly creative and innovative, as not all formulas produce a tasty beer. Still, the number of new craft beer flavors numbers in the hundreds every year. 

Adaptable consumers

Ho Chi Minh City’s Pasteur Street Brewery made 300 differently-flavored beers in its first year. Director of the Pasteur Street Brewing Co., Mr. John Reid, is considered the key individual behind the arrival and the rising popularity of craft beer in Vietnam. With Jasmine IPA its best-seller, Pasteur Street is the largest company in the industry in Vietnam and two years since getting underway now exports to several countries in the region. 

In a relatively short period time, more than 20 craft brewers and brewing companies have joined the scene, mostly in Ho Chi Minh City, such as Heart of Darkness, Platinum, BiaCraft, Winking Seal, Fuzzy Logic, and East West, as people in the southern city are quite open and adaptable. Hanoi, meanwhile, also has a few craft brewers such as Furbrew, Barett, and the latest, Ibiero, which was launched just four months ago. 

The majority of craft brewers are pleased with their initial results and surprised by the willingness of Vietnamese consumers to try their brews. “Results have been great!” Pasteur Street Brewery’s Account Manager Mischa Smith told VET. “There have been nights when my boss and I have been the only foreigners at our place, with everyone else being Vietnamese! This is the kind of growth we love to see.” 

After a year in the business, Heart of Darkness has seen its business grow significantly every month, with a steady shift from an expat customer base to a nice mix of expats and Vietnamese. “We are at about at 60/40 right now, Vietnamese to expats,” said founder Mr. John Pemberton. “We’d like to get to a 70/30 mix.” 
After five months, the owner of Ibiero is also quite happy, as nearly 80 per cent of customers are Vietnamese. “We have many Vietnamese customers who keep coming back,” Chairman Do Giang Vinh said. Surprisingly, more than 30 per cent of its customers are women, while about 35 per cent are return customers.

At the East West Brewing Company, the ratio of Vietnamese customers is about the same as at Ibiero. CEO Loc Truong expected its customer base would be mainly expats and foreign tourists but he’s been proven happily wrong. A 375-ml glass sells for about VND100,000 ($4.3), or twice the price of an imported beer and five-times the price of local and regional brews. “At such a price, craft beer truly is premium so will find favor in big cities like Hanoi and Ho Chi Minh City,” Mr. Loc said. 

Despite its high price, it seems a lot of Vietnamese customers are attracted by craft beer’s uniqueness. “Craft beer doesn’t have preservatives, and ingredients are mostly imported from Europe,” Mr. Vinh said. “It must be kept at a suitable temperature, so the flavor and quality only last about three months. Making craft beer is not easy, and it’s difficult to produce flavors that prove popular among a large number of drinkers.” 

Source: The companies,VET Research, 2017

Its diverse flavors have, however, proven popular among drinkers. “We wanted our Vietnamese customers to see the difference, by building a micro-brewery inside the restaurant,” Mr. Loc said. “We hope to change the drinking culture, from one based on volume to one based on enjoyment.” This is truly the challenge facing craft brewers in Vietnam. 

Generally speaking, craft brewers have two customer targets: Vietnamese customers keen on something different, and expats missing the type of beer they know from home. 

From its early days, Heart of Darkness has had a vision of setting up a Western style craft brewery in both style, beer, and food, that would not be out place in the US or Europe. “People thought we were crazy, and many other breweries dumbed down their range to suit Vietnamese tastes,” said Mr. Pemberton. “We refused to do that. We changed our hop content to keep the bitterness down but introduced the wonderful world of hop flavors to customers. Once people start to understand the beauty of a good hop and malt profile, it doesn’t take long before they start to explore and expand their knowledge of craft beer.”

Ibeiro, meanwhile, has identified Vietnamese customers as its target, producing craft beer will little in the way of bitterness. Despite differences in strategy, the brewers believe that Vietnamese people are cultivated in their tastes and always looking for something new and different to try. “We see proof of this in both our success and that of other food and beverage establishments that are mainly foreign-owned but produce amazing, Vietnamese-made concepts, like Marou Chocolate, Pizza 4P, and Quan Ut Ut,” said Mr. Smith.  

Prospects for expansion 

No exact figures exist on craft beer consumption at this time, though some say it may have accounted for 0.001 per cent of total beer consumption of 3.8 billion liters in 2016. Mr. Loc believes its share will rise to 0.3 per cent within the next three years, or the same as the current share held by imported European beer.

Though a small percentage, Vietnam is one of the leading beer consuming countries in the world per capita. “Vietnamese love their beer,” Mr. Pemberton said. “It’s deeply engrained in the culture, making Vietnam a leading consumer in Southeast Asia and third in all of Asia. Putting these things together, and with the economic growth that Vietnam is currently enjoying and the greater number of people in the middle and upper classes with disposable income and a love for going out, and we believe the timing is right for craft beer in Vietnam.”

Of a similar mind, Furbrew’s owner Thomas Bilgram is confident enough to say that Vietnam’s craft beer industry is about to take off big-time. “Like all craft markets, it takes time to build momentum but it will happen quickly in Vietnam,” said Mr. Pemberton. “Craft beer is all about exciting flavors, and this is something that Vietnam has in its food and culture already. I have a strong belief that craft beer will take off in the country.” 

The craft brewing community has also gradually expanded over the last two years. Ibiero plans to open craft beer chains in the four major cities of Hanoi, Ho Chi Minh City, Da Nang and Nha Trang. Heart of Darkness, meanwhile, has always planned to expand across Asia. It has launched in Thailand to an amazing reception, with next being Singapore, in late October, then Hong Kong and New Zealand. “Within our first year, we will be serving our beers in five countries,” said Mr. Pemberton.

The biggest brewer, Pasteur Street, distributes its craft beer to more than 170 outlets in Ho Chi Minh City, Nha Trang, Da Nang, Hoi An, Mui Ne, and Vung Tau, and will add Phu Quoc Island to the list shortly. As for exports, “we are looking at all major markets where we aren’t yet to find a strong local distributor who we can work with,” said Mr. Smith. 

With a maximum capacity of 20,000 liters per month, East West’s plans for expansion will be implemented in the near future. To expand and reach more customers, two to four new flavors are being created at the brewery every month. Many are made from Vietnamese-grown materials, such as cocoa, black pepper, lemongrass, ginger, Da Lat coffee, durian, lime, jaggery, and green rice. “Craft brewers make efforts all the time to create new and unique flavors,” Mr. Vinh said. 

Craft beer requires a passion and love for beer among brewers. They have a good relationship with each other, according to Mr. Vinh, and are open to sharing information on brewing. Competition exists, but at the moment it makes sense to view bolstering the popularity of craft beer as a shared goal. “Our craft brewers have a very tight-knit scene,” said Mr. Pemberton. “The breweries work together, play together, and have built a lot of buzz and excitement around the scene, which makes people curious.”

As the brewers say, the true reward in the business is sharing the passion for craft beer and seeing others become equally passionate.  

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