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April 8, 2008

Competition bubbles over in the beer market

Competition in the Vietnamese beer market is getting fierce as two of the largest domestic brewers going public and the entrance of more foreign players, Vietnam News Agency reported.

After going through restructuring, Saigon Beverage Corporation (Sabeco) and Hanoi Beverage Corporation (Habeco) have emerged as joint stock companies, pushing to raise their share of the local market, targeting outputs of 1 billion and 900 million litres of beer by 2010, respectively.

Other domestic producers are also speeding up construction of breweries with annual output of more than 50 million litres each, with their operations set to begin within the next few years.

Besides, foreign enterprises including Asia Pacific Breweries (APB), SAB Miller, Kronenbourg and Miguel Vietnam have also accelerated their investments in local beer.

Asia Pacific Breweries boasts four plants in Vietnam and has set up a joint venture with Quang Nam provinces VBL, which churns out 500 million litres a year.

SAB Miller and Kronenbourg have also established joint ventures with local partners Vinamilk and the Cigarette Corporation, respectively, to build breweries with estimated annual output of at least 100 million litres.

Meanwhile, Philippines’ beverage giant San Miguel plans to lift its annual output in Vietnam to 50 million litres.

With an annual growth rate of 18 percent, the country’s beer market should reach 3.5 billion litres by 2010, the news agency quoted Phan Chi Dung, the director of the Ministry of Industry and Trade’s light industry department, as saying.

Dung, however, foresees an increasing industry trend for small-sized breweries to be dissolved or merged with larger ones. Smaller beer producers could act as sub-contractors for larger enterprises, he said. Large breweries belonging to dominant producers will proliferate in the near future whereas smaller ones will be restricted.

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