Vietnam:Alcoholic drinks recorded strong performance in 2008

Thanks to the improvement in Vietnam’s economy there has been a significant increase in consumers’ disposable incomes as well as their living standards, especially as Western habits are being absorbed quickly by a growing number of young consumers, male and female alike. These factors contributed greatly to the strong performance of alcoholic drinks in Vietnam as manufacturers are motivated to expand their capacity, diversify their products as well as launch many promotional campaigns to attract consumers. The potential of this market has also attracted the interest of many multinationals to establish as well as strengthen their presence in Vietnam.

Beer continued to lead growth in 2008

In 2008, while volume growth in other sectors such as spirits and wine was slower or remained the same, beer showed a stronger performance compared to the review period CAGR. This is because of the growing Vietnamese habit of drinking beer, and with higher incomes, consumers are switching to beer with better taste. In fact, not only are local manufacturers trying to improve their product quality, many international manufacturers such as Anheuser-Busch have also set up operations in Vietnam, bringing more premium beer to consumers.

Spirits growth in 2008 was slightly slower than the review period CAGR due to counterfeit and contraband issues which caused considerable caution among consumers when purchasing these products. Wine growth remained largely unchanged due to growing maturity and a downturn in the economy.

SABECO remains leader while Vietnam Brewery and HABECO move up

In 2007, Saigon Brewery Co (SABECO) remained the leader in alcoholic drinks. Vietnamese consumers are familiar with the company mainly through its beer brands 333’ export and Saigon, which are positioned very well in the standard lager segment. Its success was also attributed to several other factors including recently re-structured nationwide distribution, and frequent advertising and promotional campaigns.

Vietnam Brewery was the second-ranked player in alcoholic drinks in 2007, followed by Hanoi Brewery (HABECO). While SABECO’s market share was unchanged in 2007, the next two companies in the ranking showed an increase in share through various activities such as enhancing production capacity and product quality as well as brand image, which made the market more competitive and were beneficial to consumers.

On-trade channel dominates distribution

The on-trade channel, including hotels, restaurants, bars, pubs and discotheques, continues to do well and dominates volume sales of alcoholic drinks. Indeed, with higher disposable incomes, many more Vietnamese can afford and often prefer to socialise with friends, engage in business and consume alcoholic drinks in a bar or restaurant to enjoy an attractive atmosphere with food and music. In addition, more and more premium restaurants, hotels and sophisticated bars and discotheques have been opened up targeting the growing number of affluent, young Vietnamese, expatriates, and foreign tourists. This has spurred growth in the sale of alcoholic drinks through on-trade channels as compared to off-trade outlets.

Alcoholic drinks expect healthy growth over the forecast period

As the Vietnamese economy is expected to continue to progress well over the next few years, leading to higher disposable incomes as well as modern lifestyles, alcoholic drinks sales are projected to continue their healthy growth. However, there may be a slight slowdown in volume terms, especially for low-end products, as consumers move towards higher standard products thanks to their greater purchasing power. More new types of premium products are expected to be launched in each sector, especially with the presence of well-known multinationals such as Asahi Breweries and Anheuser-Busch, etc.