Oct 18, 2012

Vietnam - Where to invest in? Breweries!

Follow Me on Pinterest
VietNamNet Bridge – Experts have every reason to believe that breweries are the most lucrative business field for any investors. Vietnam is a vast market where the demand remains always high, even in the economic crisis.

The beer sales have been reportedly decreasing dramatically in all the big markets of the world, but the sales have been increasing steadily in Vietnam.

Though Vietnamese have to cut down their expenses and only spend money on the most essential goods and services, they still spend money on beer and parties. While enterprises in all other business fields try to keep production at moderate level and dare not think of expanding business at this moment, breweries in Vietnam are considering scale up their production.

Euromonitor International, in its latest report, pointed out that Vietnam is the biggest beer drinker in South East Asia, with 2.6 billion liters of beer consumed in 2011. The position of Vietnam has also been recognized by the Japanese Kirin Holdings which says that Vietnam is among the 25 countries with the highest levels of beer consumption.

Breweries prosper even in crisis

When programming the development of the drink industry by 2010, the Ministry of Industry and Trade predicted that the beer output would reach 2.7 billion liters of beer by 2010.

Two years after the development strategy was approved, the ministry raised the estimated beer output by 2010 to 3 billion liters after considering the real situation. With the adjustment, the beer consumption per capita level of Vietnamese people is 28 liters per annum.

In 2001-2007, the brewery industry developed so strongly with the growth rate of 13.11 percent per annum on average. The output soared from 1.29 billion liters in 2003 to 2 billion in 2008. The consumption per capita level also increased from 10.04 liters in 2000 to 21.65 liters in 2007.

Even in 2008, the record high inflation rate of approximately 20 percent could not force people to spend less money on beer. The national economy has fallen into recession since 2009, forcing people to fasten their belt. However, Vietnamese people never think of giving up drinking.

Habeco in the north and Sabeco in the south, the two big guys in the brewery industry, both have reported satisfactory business results for the first half of the year. Habeco has reported the 10.3 percent increase in turnover in comparison with the same period of the last year, while Sabeco’s figure was nine percent.

Vietnam drinks 4.4 billion liters of beer by 2015

Economists believe that the investments in the drink industry can bring the profits much higher than other industries. In 2001-2015, the profit of the industry increases by four folds with the growth rate of 32 percent per annum. In the drink industry, breweries prove to be the most profitable enterprises.

Since beer products are imposed with a luxury tax, local authorities all want to set up breweries in their localities to have bigger local budgets from the incomes from breweries.

In the first year of the WTO-period, Vietnam witnessed the boom of the brewery industry with a lot of merger and acquisition deals carried out and a lot of new breweries established.

In the “brewery race,” some 10 local factories had to shut down one day, because they could not exist in the market, causing the big waste of billions of dong in investment capital.

However, more investors still want to jump on the bandwagon, because they can see the high demand in the market. Meanwhile, Sabeco in June and September started the construction of the two breweries in Ninh Thuan and Vinh Long provinces.

The watchdog agency has predicted that by 2015, Vietnam would produce and consume 4.2-4.4 billion liters of beer, which means every Vietnamese person would drink 45-47 liters of beer a year. Ten years later, the figure would be 60-70 liters.

Kim Chi

Business & Investment Opportunities 
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. Since we are currently changing the platform of www.yourvietnamexpert.com, you may contact us at: sbc.pte@gmail.com, provisionally. Many thanks.

No comments:

Post a Comment