Vietnam beer market background

June 2012 – Let’s start off with a few quotes from beer producers in the region. 

Vietnam “has 90 million people whose average age is 28 years and love to guzzle beer,” said Yoshiyuki Mochida, who heads Tokyo-based Sapporo’s international business. 

Christopher Kidd, regional director of Singapore-listed Asia Pacific Breweries Ltd, which makes Heineken and Tiger said that “Viet Nam is one of the largest beer markets in the Asia-Pacific and has the highest growth potential”. 

Like many things in Vietnam, the numbers are not transparent.  There is no definitive information when it comes to beer statistics.  In addition there is a lot of misinformation and outright errors.  Therefore, we rely on educated judgement of estimates and piece together the information that seems “about right”.  

Published August 2011, the Kirin Institute of Food and Lifestyle Report Vol. 30 declared that Vietnam grew from 30th place in 2000 to 13th place in 2010, on the list of the largest beer-producing countries in the world.

Vietnam Beer Market fast facts:

  • The Vietnam beer market volume is the third biggest in Asia, (after China and Japan), up from 8th position in 2004.
  • Beer holds 98% volume share of the total official alcoholic drinks industry in Vietnam
  • Beer worth >89% of the total official alcoholic drinks market value and growing
  • The beer market has a historical growth rate of 9 – 11% & forecast to grow at 12 – 15% until 2015 and 8% 2016-25
  • The population of “primary drinkers” (20 – 40 yr olds) forecast to grow by 5%, equivalent to 1.7 million additional consumers, by 2015
  • Beer production focused around population centres in South-East, Red River Delta & central region
  • Increasing investment, both domestic & foreign
  • Beer is status – Westernisation just keeps on advancing!

Beer market size?

The Vietnam beer market was estimated to be worth around US$2.3bn in 2006.  At that time, beer accounted for 89% of market value and 97% volume of the total alcoholic drinks industry in Vietnam according to Mekong Securities during their review of the proposed Sabeco IPO. 

Between 2006 and 2009, beer’s volume share of the total alcoholic drinks industry in Vietnam rose from 97% to 97.9%. 

According to Euromonitor International, Vietnam retail beer sales will probably rise 20% to 96 trillion dong (US$4.6 billion) in 2012.

Vietnam Total Beer Production Volumes:

The Vietnam beer market is already the third biggest in Asia, (after China and Japan), up from 8th position in 2004.  

It also became the 13th biggest beer market globally in 2010, up from 20th in 2008.

* – Estimate – Vietnam’s Ministry of Industry & Trade growth plan for the beverages sector 2009
# – Estimate – Vietnam’s Ministry of Industry & Trade forecast – reported 19/1/12 

In 2009, the Ministry of Industry and Trade (MoIT) approved a master plan to develop the domestic alcohol, brewery and beverage industry to 2015 and beyond.  Under the plan, the industry is expected to post an annual volume growth rate of 13% 2011-15 and 8% 2016-25.

Beer Consumption Per Capita:

Vietnamese beer consumption per capita now stands at almost 30 litres beer per capita per annum.

This figure has more than doubled in the seven years from 2005 – 2011 and has more than tripled since 1995.

Sources: Kirin, APB, Habeco, VBA

Plenty of room for further growth.                                                                                                                                   

Note that although the growth rate is strong, the per capita volume consumption in Vietnam is still not particularly high, at just over a third of that of the US, thus leaving room for further growth. 

Beer consumption per capita in Vietnam is also still well below other Asian countries, such as South Korea, Japan and China.

Sources – Kirin, APB

Limited consumer choice:

The current consumer choice is extremely limited with gaps available for new product offerings.  However, as you might expect, it’s not as simple as that. 

The two state-owned brewers (Sabeco & Habeco) control 50 – 60% of market volume (depending on whose numbers you view), primarily through a blend of control of the distribution networks and consumer unwillingness to change from what they know.  Nevertheless, foreign brewers are establishing a stronger presence and marketing techniques are improving.

High Margins:

There are high margins to be had, especially considering that almost ¾ of the Vietnam beer market is on premise and there is low supermarket or large retailer penetration.  

This is highlighted by the fact that APB makes almost half of its profits in Vietnam, despite operating in fifteen countries in Asia Pacific.  In addition to selling a lot of beer, it also previously reported 50% higher profit margin in Vietnam than in other countries in the Asia-pacific region. 

Needless to say, these higher margins are really only applicable once you are covering your costs.  SABMiller, for instance, are unlikely to be experiencing these same margins. 

Growth of premium:

The Vietnam beer market structure is changing. The low-end is contracting and premium is growing.  This is due to a number of factors, many of which we’ve alluded to previously and including:

  • Excise rationalisation post WTO accession, including Increased excise on Bia Hoi
  • Rising consumer incomes beginning to erode consumer price sensitivity
  • If beer is status, then why be seen to drink cheap? 

As we mentioned in the article “Vietnam market background – a few stats”.  Beer is one of what we call the “three needs” (high visibility, high risk, status items), along with the motorbike that you drive and the mobile phone that you fiddle with constantly. 

Industry outlook:

The outlook for Vietnam’s beer market remains very promising, thanks to factors including:

  • high economic growth and increasing personal income
  • rising beer consumption per capita
  • expansion of drinking occasions 

In addition with 70% of the population less than 40 years old and one million people a year turning 18, there is a huge emerging & untapped market for new beer brands as these consumers reach the age of majority.

For more information, please feel free to contact us directly. 


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