Breweries savor the market fizz

A promo model at a booth set up by local beer maker Sabeco at a beverage fair in Hanoi. With its 86 million population, tropical climate and beer-lovers, Vietnam is a booming beer market.

If one was asked to single out one industry with a great growth potential in Vietnam, the answer would be a four-letter word.

Beer.

The country’s annual beer consumption hit 2.5 billion liters in 2010, nearly double the figure in 2003, according to data released by the Ministry of Industry and Trade.

But the next four years, industry insiders believe, will mark boom time for the beer market. The trade ministry has forecast that beer consumption could rise to four billion liters by 2015.

Research firm Companies and Markets, in its recent report on Vietnam’s cooking and drink market, said sales of alcoholic drinks would surge 34.6 percent in 2015 from now. It also noted that rising wages and increasing tourist arrivals will continue to catalyze food and beverages consumption in Vietnam.

Breweries are trying to tap this growth by boosting production and working on ambitious expansion plans.

Ho Chi Minh City-based Saigon Beer Alcohol and Beverage Corporation, or Sabeco, sold a billion liters of beer last year. The company, which owns the Saigon and 333 brands, believes the beer market has nowhere to go but up, and is targeting sales of 1.3 billion liters this year and two billion by 2015.

In March, Sabeco opened three new breweries that can together churn out nearly 300 million liters of draught and canned beer. The plants cost some VND2 trillion to build. The company is also developing three other projects that would, when completed, add another 500 million liters to its annual output.

Sabeco is not the only one with big plans.

Vietnam Brewery, whose products include Tiger Beer, Heineken and Bivina, announced last week that it would boost production by 50 percent in the next 12 months, raising its annual output to 420 million liters from the current 280 million liters.

The company, which started operations in 1991, said it wants to sharpen its competitive edge by adding a second canning line that can produce up to 90,000 cans per hour in HCMC, and at the same time, expand capacity at its breweries in Hanoi and Da Nang.

Michel de Carvalho, principal owner of the Heineken brand, seemed surprised at how well his brand is doing in Vietnam.

In a promotional event in HCMC last week, Carvalho said more than 200 million liters of Heineken beer was consumed in Vietnam last year, putting the country in third position among 170 markets where the brand is available.

He said Vietnam will take over the second spot, currently held by France, in 2012, and is on its way to surpass the US to rank first in 2015.

Critics have raised concerns over Vietnam’s excessive drinking problem for years. But for beer producers, a growing market is a great opportunity to keep their taps flowing and the money coming in.

The country now has around 350 beer companies, including 35 with an annual output of more than 15 million liters each. Between January and April, they produced 714.6 million liters of beer products, up 9.2 percent from the same period last year.

As if this weren’t enough, importers have been bringing in large volumes of foreign beer, mostly from Belgium, Germany and the Netherlands. The imported beer, priced two or three times higher than local products, plays perfectly into the preference for foreign products among many Vietnamese consumers.

Around 1.66 million alcoholic products were imported into Vietnam last year, according to official data. The Saigon Port in HCMC reported a 50 percent surge in beer imports in 2010.