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December 6, 2017updated 02 Aug 2018 6:48am

International players pounce on privatisation of breweries in Vietnam

In order to raise money to address a growing budget deficit, the Vietnamese government is looking to sell off a majority share in the two largest domestic breweries: Saigon Beer Alcohol Beverages Corporation (Sabeco) and Hanoi Alcohol Beer and Beverages Corporation (Habeco), both of which are state-run. This sale represents a key opportunity for large foreign brewers to take a stake in Vietnam’s rapidly growing beer market.

By Maria Bracken

The sale of a 53.6% stake in Sabeco’s will occur on December 18th and Heineken, Anheuser-Busch InBev, Asahi Group Holdings, and Kirin Holdings, have all registered interest in the sale. Habeco is expected to be sold early next year.

Vietnam is one of the fastest growing markets in Asia. It is expected to meet its target of 6.7% economic growth this year and experience similar growth rates next year. Its beer market is performing similarly well – according to GlobalData’s market analyzers, beer volumes in Vietnam grew by 7.4% in 2016. Such a market is enticing for large international beer corporations experiencing tepid volume growth in North America and Western Europe.

Vietnam benefits from a large youthful population and a strong social drinking culture oriented around beer. Furthermore, the government, keen on a high valuation of Sabeco and Habeco as well as a strong beer market, is wary of excessively raising “sin” taxes or other restrictions on consumption. According to GlobalData’s forecasts, Vietnam’s beer volume growth is expected to remain strong and grow at a CAGR of 6.57% between 2015 and 2020.

Strong economic growth, liberalizing economies, and a growing consumer class across Southeast Asia will increasingly draw in large international players across consumer goods industries.  Brands seeking to enter the region, however, will have to navigate a complex and sometimes turbulent political space.

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