Vietnam's local beer players face foreign competition under TPP

Under the TPP agreement, Vietnam’s tax on beer imported from member countries will be reduced from 35 per cent to zero. As a result, imported beer will flood Vietnam, experts warned.
Both international and local players are expected to step up marketing activities and new product developments and expand distribution networks.
Sabeco is the biggest Vietnamese beer maker, with a 46-per-cent market share. The Hanoi Beer Alcohol and Beverage Joint Stock Corporation (Habeco) accounts for 17 per cent of the market.
And Vietnam Brewery Ltd (VBL), a joint venture between Saigon Trading Group (Satra) and Asia Pacific Breweries Ltd (APBL), which is now Heineken Asia Pacific, accounts for an 18-per-cent market share, according to a market report by Euromonitor.
Sabeco holds 100 per cent of the charter capital in three member businesses and long-term investments in 19 associated companies. It reported total sales of nearly 29.8 trillion dong (Bt47 billion) and a pre-tax profit of 3.7 trillion dong in 2014.
Euromonitor said that last year Sabeco had the highest market share with revenues of 30 trillion dong but had a profit of only 4 trillion dong.
Sabeco’s and Habeco’s combined profits were 5.4 trillion dong, compared with VBL’s 6.2 trillion dong.
An industry insider said that despite the high revenue of Sabeco and Habeco, their products were still focused on the medium-market segment thus leading to low profits, while foreign players had used good marketing and a reasonable price strategy to bring higher profits.
Mikio Masawaki, the new general director of Sapporo Vietnam, said the difficulty in building the company’s brand and advertising its products was solved after its Japanese parent entered Vietnam more deeply by taking control of a local brewery with the hopes of increasing its share in this lucrative market.
Sapporo International has concluded a contract to buy 29 per cent of Vietnam National Tobacco Corp. After the transaction, Sapporo Vietnam became a wholly owned subsidiary of the Japanese beer maker.
Currently there are 4,000 retailers selling Sapporo products, mostly in central Ho Chi Minh City. The figure is expected to climb to about 7,000 by February.
In May, Belgium-based brewer Anheuser-Busch InBev opened its first brewery in Vietnam. The plant, covering 100,000 square metres in the southern province of Binh Duong, will produce 50 million litres of beer a year, the company said.
It said the capacity would be doubled in the future.
The plant will initially produce the company’s global brands, including Budweiser and Beck’s. It will help serve more than 90 million consumers in Vietnam, according to Anheuser-Busch InBev.