Where to invest in? Breweries! |
Sabeco has been leaving other rivals in the race far behind with VND30 trillion worth of revenue in 2014 and 46 percent of market share. Meanwhile, Habeco has 17.3 percent of market share and VBL, the distributor of Heineken and Tiger, holds 18.2 percent.
However, according to Euromonitor, the market survey firm, Sabeco’s revenue was the highest in 2014, at VND30 trillion, but its profit was modest at VND4 trillion only.
Meanwhile, VBL, which is considered a ‘younger brother’ if compared with Sabeco, had profit of VND6.2 trillion which was even higher than the profit made by both Sabeco and Habeco (VND1.4 trillion) in total.
Sabeco and Habeco hold bigger market shares but have lower profits because their products target common people with low selling prices. Meanwhile, foreign breweries target high-income earners, and can make high profits thanks to a good pricing strategy.
Targeting the high-end market segment and applying a good pricing strategy is also what Sapporo was striving for after the joint venture became a 100 percent Japanese invested enterprise.
VBL, which is considered a ‘younger brother’ if compared with Sabeco, had profit of VND6.2 trillion which was even higher than the profit made by both Sabeco and Habeco (VND1.4 trillion) in total. |
Meanwhile, AB InBev has set up a brewery with the capacity of 50 million liters of beer in the first phase of operation. Its Budweiser and Beck’s are positioned as high-end products.
A branding expert noted that foreign breweries tend to make money with high-end products, which is a reasonable strategy for them to battle with Vietnamese breweries which have large market shares.
Sabeco eyed by investors
The information that the state would divest all of its stakes in Sabeco, according to analysts, will enliven competition in the beer market. While VBL and Sapporo had to spend time to develop their networks in Vietnam, others will not have to do so if they can obtain 53 percent of Sabeco’s stakes.
This explains why a lot of big players, such as Sab Miller, Kirin Brewery, Asahi Breweries and Asia Pacific Breweries, are eyeing Sabeco. Thai Beverage is the most ‘enthusiastic’ investor in the case as it has offered to buy Sabeco’s stakes at $2 billion.
Analysts believe that if the deal succeeds, it would be the best deal in Asia in 2015.
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