54bf1207b86eaVSC BeverageSupplyChain 2015

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NETWORK
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LEARN. SHARE. NETWORK
BEVERAGE
SUPPLY
CHAIN
Beverage Supply Chain
I. OVERVIEW
1. Vietnam Drink Industry SWOT.............................. 4

2. Beverage sales and growth.................................. 5
3. Beverage value chain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4. Beverage distribution channels. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5. Tax and duties on beverage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
II. BEVERAGE CATEGORIES BREAKDOWN

1. Alcoholic drink
a. Volume/ Value and growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
b. Alcoholic drink categories breakdown ......... 12
c. Beer.................................................................. 12
2. Soft drink
b. Soft drink categories breakdown. . . . . . . . . . . . . . . . . . 17
c. Ready-to-drink (RTD) tea. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3. Hot drink
b. Hot drink categories breakdown. . . . . . . . . . . . . . . . . . . 20
c. Hot drink market shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
III. COMPANY MONITOR
1. Hanoi Beer Alcohol Beverage Corp (Habeco)
2. Saigon Beer Alcohol And Beverage Corporation (Sabeco)
IV. TRENDS AND DEVELOPMENT
1. Spirits major Diageo acquires additional stake in Halico

2. SMB eyeing regional growth
3. Regional brewers spreading their wings across Vietnam

4. Spirits and Soft drinks potential attracting investors
5. Coffee potential perking up sector investments
6. Ready-to-drink tea attracts investment
V. CONCLUSION
2 www.vietnamsupplychain.com
I. OVERVIEW
The beverage industry in Vietnam has existed for a long time and has been expanding more quickly over
the past decades. The development of the industry was supported by foreign investment and the catch-up
development of the domestic producers recently. In 1994, Coca-Cola constructed their first plant and has
achieved high growth since then. In 1991 Pepsi Co also entered in Vietnams market under a joint venture
and continues to have strong presence in Vietnam nowadays. In a similar but later move, a giant of the
world beverage sector, Nestle, plans to increase its coffee sourcing from local farmers in Vietnam and has
committed to a new coffee plant in the country. The USD 270 million plant will be constructed in the south-east
province of Dong Nai and will produce Nescafe-branded products for the domestic and international markets
from 2013. Products of the beverage sector are diversified with high quality meet consumers demand. The
industry has contributed significantly to the economy. As of 2013, Vietnams food and beverage (F&B)
consumption was USD 42.8 billion, accounted for 40.5% of total consumption and posted a remarkable
compounded annual growth rate (CAGR) of 11% over the period 2010-2013.
1. Vietnam Drink Industry SWOT

(Vietnam Food & Drink Report Q1 2013 by Business Monitor international Ltd)
Strengths
Vietnamese consumers, particularly the young and
affluent, are interested in brands, and, accordingly,
renowned Western products backed by investment
in marketing and promotions tend to have highly
successful launches.
The wealthy urban centers of Hanoi and Ho Chi
Minh City now provide highly receptive consumer
audiences.
Alcoholic drinks are widely consumed and have
gained popularity in recent years.
Vietnam has been one of the fastest-growing
economies in Asia in recent years, with GDP growth
averaging 7.1% annually between 2000 and 2011.
Competitive pressure is quickly intensifying in the
drinks sectors, which is likely to drive greater sector
dynamism and fuel growth.
Weaknesses
There are wide income disparities between urban
and rural areas, and local consumption patterns
vary significantly according to income.
The drinks industry remains largely fragmented,
except for a few key sectors, such as alcoholic and
soft drinks.
Despite the growing presence of multinationals in
the market, local firms continue to dominate the
beer market.
Vietnams infrastructure is still weak. Roads, railways
and ports are inadequate to cope with the countrys
economic growth and links with the outside world.
Establishing separate breweries in different regions
is costly but remains one of the best strategies to
overcome the lack of infrastructure.
Opportunities
Accession to the WTO, in January 2007, will
continue to benefit Vietnamese exporters, with
the gradual removal of market barriers and trade
restrictions set to increase competition.
Vietnams large domestic market, growing export
opportunities and low labor costs, as well as
the prospect of acquiring newly privatized drink
companies, offer further investment opportunities.
A growing tourism sector is fuelling interest in
convenience categories, in addition to sub-sectors
such as soft and alcoholic drinks.
In line with consumers rising disposable incomes,
there are opportunities for premium-branded
products in the soft and alcoholic drinks subsectors.
The global trend towards health consciousness
provides an opportunity for drinks manufacturers to
diversify into perceived healthier options.
Threats
Vietnams WTO membership may result in smaller
companies unable to cope with the increased
competition being forced out of business.
Elevated raw-material costs threaten profitability in
a competitive market in which higher prices cannot
easily be passed on to consumers.
Rising unemployment levels are taking their toll on
consumer confidence.
2. Beverage sales and growth:
In 2013, retail sales of the beverage sector in Vietnam reached USD 8 billion, a 7.6% rise compared with
2012. Alcoholic drinks were the largest category with 70% contribution to total beverage market value.
It modestly grew 6.3% up to USD 5.6 billion, the lowest growth rate amongst other beverage categories.
Soft drinks posted the highest growth of 12.4% to record USD 1.7 billion in sales value, while hot drinks
was the smallest segment with USD 0.7 billion revenue in 2013.
2013 Sales
2013 growth
Beverage
categories
USD8 bn
7.6%
Alcoholic
USD5.6 bn
6.3%
Sabeco, Habeco
Soft drinks
USD1.7 bn
12.4%
Pepsico, Tan Hiep Phat, URC VN
Hot drinks
USD0.7 bn
6.9%
Nestle, Vinacafe, Vinatea
Key players
Source: Euromonitor International, VPBS Research

The beverage market overall is growing rapidly and is becoming more diverse. Sales of beverage products
are expected to increase between 6.3 7.2 percent per annum for the period 2011 2013.
Non-alcoholic beverages: Due to a combination of westernization and rising health consciousness, both
soft drinks and healthy alternatives, such as fruit and vegetable juices, are expected to grow. As the
population becomes wealthier, demand for hot beverages such as coffee and tea is also expected to
rise.
Alcoholic beverages: Higher income levels and westernization are influencing alcohol consumption,
which is increasing rapidly in Vietnam. Alcohol consumption is forecast to increase by around 6.5 7.5
percent each year for the period 2011 2013.
Currently, 98 percent of alcohol consumption is beer. However, as other alcoholic beverages

such as spirits and wine become more affordable for consumers, demand is expected to rise.
Wine is expected to grow at around 4 percent per annum for the period 2011 2015. White
wine is forecast to grow at around 6 percent per annum for the same period and red wine at
3 percent.
3. Beverage value chain:

Food and beverage manufacturers deal with many different suppliers, distributors and
channels in taking their product to market.
Common distribution beverage channels

OVERSEAS EXPORTERS
PROCESSOF VALUE CHAIN ANALYSIS

Domestic Market Channel
Export Market Channel
Functions
RETAILERS
Wet Market
retailers
Hospitality, Supermarkets,
Small Shops
Supermarkets
Outside Tanzanla
International
Cold-chain
Transport
Distributors
(Importers)
Gap/sps
Certifcation
Services
Wholesalers
(Importers)
WHOLESALE
Wet Market
Intermediarles
BROKER
Distributors
INPUT SUPPLY
4. Beverage distribution channels:
PRIVATE IMPORTERS,
DISTRIBUTORS AND AGENTS
JV IMPORTERS
AND AGENTS
JV HOTELS & RESTAURANTS
STATE-OWNED WINE WHOLESALERS
Exporters
Intermediary
Co-op Association
Farmers (Small, Medium, Larger)

Farmer Associations
Technical
Assistance
Distributors
Stockists
Vietnam possesses a dense retail network, widely spread throughout the country, including 424 supermarkets,
23 hypermarkets, 365 mini-marts and almost 779,000 of traditional markets and small private shops. While
supermarkets and hypermarkets account for the majority, the convenience store model is still in its infancy.
Grocery outlets are dominant with more than 636,000 units. The number of retail outlets is reported to have
increased every year at a rate of 1.2% during the period of 2009 through 2013. Also, existing prominent retailers
and wholesalers such as Saigon Coop, Big C, and Metro Cash & Carry have committed themselves to further
expansion not only in big cities but also in many provinces. The continuous growth and expansion of mass retail
outlets strongly encourages consumer purchasing and increases consumption value
STATE-OWNED IMPORTERS,
DISTRIBUTORS AND AGENTS
Financial
Services
Brokers
Intermediaries
PRODUCER
Support Markets
DEPARTMENT
STORES
SUPERMARKETS
WINE
SHOPS
OTHER HOTELS
RESTAURANTS
& BARS
CONSUMERS
Vietnam allows foreign companies to import food and beverage products and distribute them through
both wholesale and retail channels. However, companies need to be registered in Vietnam and have an
investment license.
Unless a company has an investment license for distribution and invoicing, foreign companies must work
with an authorized agent or distributor in order to sell their products in Vietnam.
Agent: An agent will sell products for a commission. A typical agent will also provide market research,
marketing and promotion and after sales service to consumers.
Distributors: Distributors will purchase goods from foreign companies for resale.
Distributors can also sometimes perform the functions of an agent.
7
Retail outlets by categories (units)

700,000
600,000
609,359
5. Tax and duties on beverage:
619,674
631,208
624,274
636,158
500,000
400,000
300,000
200,000
133,835
100,000
141,475
138,271
2009
2010
2011
grocery outlets
142,110
2012
143,613
2013
Non-grocery outlets
17,4%
82,6%
Alcoholic
drinks
Off-trade
40,4%
59,6%
Soft
drinks
58,4%
41,6%
Hot
drinks
Imported products
Imported products are subject to Import Tax, Special Consumption Tax (SCT) and
VAT as follows:
Import Tax = Import tax rate x Import price (*)
Special Consumption Tax (SCT) = SCT rate x (Import price (*) + Import tax)
VAT = VAT rate x (Import price (*) + Import tax + SCT)
(*) Including package value
Wine > 20% alcohol

Wine < 20% alcohol
The majority of alcoholic drinks were distributed through on-trade channels due to rising common
perception of drinking to socialize. Soft drinks followed the same pattern but at a less steep ratio of
60:40 relative to the ratio of 80:20 of the alcoholic drinks due to its convenience and high frequency of
use. In contrast, hot drinks were mainly consumed through off-trade channels as Vietnamese consumers
consider hot drinks a daily necessity and usually are consumed at home. In general, for each of beverage
category, there was 65% of off-trade sales value gone through the traditional channels with almost
779,000 of traditional markets and private shops.
On-trade
Inbound manufactured products

Local manufactured products are subject to special consumption tax (SCT) and VAT as follows:
Special consumption tax (SCT) = SCT rate x Selling price before VAT (*)
[VAT = VAT rate x (Selling price before VAT (*) + SCT)
(*) Including package value
On-trade
Off-trade
560,000 caf /
bars, restaurants
and food outlets
12,500 hotels
Modern trade
424 supermarkets
23 hypermarkets
365 minimarts &
convenient stores
Traditional trade
778,959 traditional
markets & private
shops
35% off trade
65% off trade
Beer
Soft drinks(carbonate)
Import Tax
Special Consumption Tax (SCT)
VAT
45%
50%
10%
Current
50-55%
35%
20 - 40%
Current
From July 1, 2015 (Draft)
25%
35%
50%
0%
65%
65%
10%
Current
10%
10%
10%

II. BEVERAGE CATEGORIES BREAKDOWN

1 Alcoholic drink:
As increasing Vietnameses exposure to drinking cultures around the world couples with their popular
perception of drinking to socialize, Vietnam alcoholic drinks consumption continues growing y-o-y and
has gained the biggest retail sales among other beverage categories. Further, rising numbers of tourists
and expatriates living in big cities also incentivize alcohol-serving retailers to expand, which in turn
stimulates local consumption as rising adoption of western lifestyle becomes more prevalent.
a. Volume/ Value and growth:
In 2013, Vietnamese people drank a remarkable 3.15 billion liters of alcohol, equivalent to VND
119.5 trillion (USD 5.6 billion), representing double-digit CAGR of 10.1% and 10.6% during 2010 to
2013. Despite its slowing growth since 2012 because of reaching maturity, alcoholic drinks remains one
of the potentially lucrative markets in Vietnam. It is expected to reach USD 6.3 billion in 2015 by
Euromonitor International.
4
3
2
13.8%
2.36
12.6%
2.66
2.92
9.9%
1
2010
2011
2012
Volume (bn liters)
3.15
7.9%
2013
3.38
3.59
7.0%
6.3%
2014F
2015F
15%
10%
5%
0%
Growth (%)
Alcohol consumption volume and growth (litters/ %)

150
100
15.9%
88.5
18.4%
104.8
50
0
112.5
7.3%
2010
2011
2012
Volume (bn liters)
119.5
6.3%
2013
126.3
133.1
20%
15%
5.7%
5.4%
2014F
2015F
10%
5%
0%
Growth (%)
Alcohol consumption value and growth (VND trillion)

11
b. Alcoholic drink categories breakdown:

Alcoholic beverage consumption is largely driven by the beer category which accounted for 98% of sales
volume and 91% of sales value in 2013. Spirits and wine accounted for only 2.3% volume share (74
million liters) and 8.8% value share (VND 10.4 trillion or USD 492 million). In 2013, beer consumption
recorded more than 3 billion liters, equivalent to VND 109.1 trillion (USD 5.2 billion).
39
1.2%
35
1.1%
5.7 4.7
4.8% 4.0%
Beer
4
3
2
Spirits
109.1
91.3%
Y2013 (mn liters)
2010
64
2012
100
16.2%
80.1
19.6%
95.8
50
0
102.8
7.3%
2010
2011
2012
Volume (bn liters)
37
China
29
27
Vietnam
Thailand
Beer consumption per capita in selected Asia countries

Source: VPBS research
2011
7.9%
2013
Volume (bn liters)
150
c. Beer:
While Vietnam was leading in the SEA region with 29 liters of beer consumption per capita in 2012, the
country captured the 4th position for the entire Asia region, only after Japan (64 liters), South Korea (45
liters) and China (37 liters). According to Vietnam Breweries Associations (VBA), beer consumption per
capita rose approximately 10% up to 32 liters in 2013. As such, Vietnam is considered one of the beer
loving countries and is among the most attractive destinations for international breweries.
South Korea
2.9
9.9%
3.1
3.3
3.5
7.1%
6.3%
2014F
2015F
15%
10%
5%
0%
Growth (%)
Alcohol categories value breakdown
Source: Euromonitor International
Japan
2.3
12.7%
2.6
Y2013 (VND tn)
Alcohol categories volume breakdown
45
13.9%
Wine
3,079
97.7%
The Vietnam beer market had a CAGR of over 10% in volume and value during the period from 2010 to
2013. However, as the market becomes saturated, growth cannot be as fast as it was prior to 2011. Beer
is forecasted to grow at a slower pace with an average 5.3% per annum and the sales will be USD 5.7
billion by 2015.
109.1
6.1%
2013
115.1
121.1
20%
15%
5.5%
5.2%
2014F
2015F
10%
5%
0%
Growth (%)
Beer consumption volume and growth

Liters per capital
Lager is the main type of beer in Vietnam since Vietnamese consumers are already familiar with the taste
of lager and are reticent to try new tastes. Thus, other types of beer such as dark beer, stout and lowalcohols have only a limited presence in the market. Standard lager holds the lions share its biggest
shares of 67% of total lager due to still low disposal-income per capita. Also, there was a large gap of at
least 43% higher in unit price range of each segment including premium, standard and economy.
13
Bia Hoi
7.8%
Hanoi
Halida
35% total consumption
18.2%
Sabeco
Vietnam Breweries
Habeco
Hue Breweries
Others
Festival
Larue
Saigon
Heineken
Beer market shares 2013

(Euromonitor International)
Tiger
San Miguel
Heineken
Saigon
Saigon
333
Tiger
29.7%
7.7%
tiger
47.5%
17.3%
Heineken
Huda
9.2%
75%
Total
consumption
(excluding
Bia Hoi)
24%
15.8%
8.4% 14.4%
Saigon Export (Ssabeco)

Hanoi(habeco)
333 Export (Sabeco)
Saigon lager (Sabeco)
Heineken (Heniken/ Vietnam Breweries)
Others
Beer brand shares 2013
(Euromonitor International)
Sabeco continued to lead the beer market with 47.5% value share in 2013. Its prominent brands such as
Saigon Export, 333export and Saigon Lager accounted for 46.8% market shares by brands. Vietnam
Brewery and Habeco hold the second and third positions with market shares of 18.2% and 17.3%
respectively. While Hanoi beer brand of Habeco took 15.8% of brands share, Heineken and Tiger of
Vietnam Brewery occupied 11.5% of the pie. The top three players Sabeco, Vietnam Brewery and Habeco,
together, hold 83% of value sales of beer in 2013.
Heineken
Sapporo
Tiger
333
Larue
larue
BGI
Vietnam beer brands & distribution (pomegranate.asia)
15
2. Soft drink
a. Volume/ Value and growth

Thanks to the growing health conscious of Vietnamese people and demand for more convenient in todays
busier lifestyles, soft drinks with health benefits saw a remarkable growth, such as RTD (ready to drink)
tea, energy drinks and fruit/vegetable juice. Consumers also have concerns about food safety and the
hygiene of unpackaged drinks. Thus, products like bottled water, as a daily necessity, enjoyed good
performance since it has more benefits of convenience and cleanliness than common tap water.
Among other beverages, soft drinks enjoyed the highest value growth rate of 12.4% in 2013 and the
strongest CAGR of 12.2% over 2010 to 2013. It was also the only category that recorded double-digit
growth of 15.9% in 2013 and CAGR of 17% over 2010 to 2013 in terms of sales volume. In 2013, soft
drinks reported 2.4 billion liters consumption, equivalent to VND 36.2 trillion (USD 1.7 billion).
4
3
18.8%
17.5%
17.1%
15.9%
14.6%
13.4%
2
1
0
20%
15%
1.5
2010
2.1
1.8
2011
2012
2.4
2013
2.7
2014F
3.1
2015F
5%
0%
Growth (%)
Soft drinks sales volume and growth

50
30
In 2013, PepsiCo was leading the local soft drinks with 25.5% market share, closely followed by Tan Hiep
Phat (THP) with that of 22.7%. PepsiCo is prominent among carbonates with brands such as Pepsi, 7-up
and Mountain Dew, while THP was the pioneer of RTD tea with Zero Degree and Dr. Thanh brands which
led to a booming demand for this herbal product during 2009 to 2010. The company highly dominated
the RTD tea market itself with 41% market shares. Its strong competitor is Universal Robina Corporation
(URC), with C2 brand which is also well-recognized by its taste and handy bottle size.
24.7%
22.6%
25.6
20
36.2
28.5
11.6%
40.3
44.6
32.2
12.9%
12.4%
11.4%
10.6%
25%
10%
0%
2012
Value (VND tn)
2013
2014F
13.3%
CocaCola
22.7%
Vinamilk
Others
Soft drinks market shares, 2013

Source: Euromonitor International, VPBS research
c. Ready-to-drink (RTD) tea:
Tea is perceived as one of Vietnams traditional drinks and enjoy a long history. With the advantages
of convenience, refreshing and thirst-cooling characteristics, RTD tea is the best choice for the tropical
country with high humidity. Further, it also offers good health benefits with low sugar content and more
vitamins and minerals relative to carbonates. As such, RTD contributed 58% to soft drink revenue while
carbonates took only 16% shares in 2013.
2.1 1
6% 3%
5.7
16%
6.0
16%
RTD tea
Carbonates
21.0
58%
Bottled water
Fruit/Vegetable juice
Sport/energy drinks
Others
Growth (%)
Soft drinks sales value and growth

(Source: Euromonitor International, VPBS research)
2015F
Tan Hiep Phat

URC Vietnam
10.5%
15%
5%
2011
PepsiCo
20%
10
2010
25.5%
3.4%
10%
Volume (bn liters)
40
b. Soft drink categories breakdown:
Soft drinks categories value breakdown

17
30
25
39.8%
15
23.4
21.0
20
18.7
16.4
13.8
14.1%
18.5%
10
25.7
12.2%
11.4%
9.8%
5
0
2010
2011
2012
Value (VND tn)
2013
2014F
2015F
50%
40%
150
20%
100
10%
50
0%
20.8%
9.1%
46.4%
19.6%
Zero degree green tea (THP)
URC Vietnam
C2 cool & clean (URC VN)
Interfood
Wonderfarm (Interfood)
Tan Quang Minh (TQM)
Nute green tea lemon (TQM)
Tribeco
Tribeco (Tribeco)
Other
Other
109.1
7.5%
7.4%
2011
2012
7.3%
2013
134.7
7.8%
7.6%
7.2%
7.2%
2014F
2015F
7.4%
7.2%
7.0%
Growth (%)
Hot coffee and tea are long-standing traditional drinks of Vietnamese people. These require time to serve by
boiling ground coffee or tea leaves with water in a coffee filter or teapot. Thus, development of instant products
offers a perfect solution not only to maintain the traditional drinking habit but also ensure convenience and
timesaving for busy lifestyles. A variety of formulas were successfully introduced with 3-in-1 and 2-in-1 instant
format for both coffee and tea. As such, the growth of hot drinks is largely driven by instant products. Although the
growth rate was not as high as soft drinks, hot drinks recorded revenue of VND 14.1 trillion (USD 667.5 million),
rose 6.9%, and consumption volume of 117.1 thousand tons, grew 7.3%.
12%
20
Tan Hiep Phat (THP)
RTD tea market share
2010
101.6
125.6
Hot drinks sales volume and growth
10.2%
21.1%
7.6%
117.1
Volume (000 tons)
9.4%
5%
41%
94.5
Growth (%)
RTD tea enjoyed a rapid increase in 2009 to 2010 and then slowed down, yet still maintained two-digit
growth. In 2013, RTD tea reported VND 21 trillion (USD 994 million) value of sales, an increase of 12.2%,
and 1 billion liters volume of sales, rose 13.3% compared to 2012. It represented a robust CAGR of 15.9%
in volume and 14.9% in value over the period of 2010 to 2013.
10.8%
a. Volume/ Value and growth:
30%
Coffee sales value and growth

9.2%
6.1%
3. Hot drink:
RTD tea brand shares
15
10
10.2%
11.5
12.3
7.1%
13.1
7.1%
14.1
6.9%
15.0
16.0
8%
6.7%
6.4%
5
0
10%
6%
4%
2%
2010
2011
2012
Value (VND tn)
2013
2014F
2015F
0%
Growth (%)
Hot drinks sales value and growth

19
b. Hot drink categories breakdown:

Coffee continued to lead the hot drinks market
with 60.8% share of total category revenue (VND
8 trillion or USD 378.7 million), followed by tea with
28.2% shares (VN3.7 trillion or USD 175.1 million).
Vietnam continues to be, no doubt, a strong coffee
drinking country.
In 2013, coffee posted a higher value growth of
7.7% than the overall hot drinks category, of 6.9%
thanks to robust accelerating demand for instant
coffee which currently accounts for 75% of the
total sales value of coffee. While 3-in-1 products
(mixture of coffee, milk and sugar) have been
widely accepted by consumers since their initial
launch in 2011, there has been a gradual shift to
the 2-in-1 format (coffee with sugar or milk), instant
cappuccino and latte (Italian taste) as alternatives.
There is also a minimal presence of 4-in-1 instant
coffee with ginseng or other nutritional additives.
c. Hot drink market shares:

The domestic hot coffee market was largely controlled by local companies including Vinacafe Bien Hoa,
Trung Nguyen and Viet Thai International, which together occupied 56% market share in 2013. The competitive advantage of these competent players is their deep penetration of the Vietnamese coffee culture
and the benefits of consumers preferences and tastes. However, with a colossal budget allocated to
marketing and promotion, Nestl Vietnam has firmly captured consumers brand awareness and holds
the first position with 33% market share.
1.5
11.0%
8.0
60.8%
3.7
28.2%
In 2013, Vietnam National Tea (Vinatea) continued to lead the local tea market, with 32% of the sales
value, followed by Unilever Vietnam with that of 15.5%. Vinatea is long-established with its industry
experience and technology. Between 2010 and 2013, the tea category saw robust branding strategies
come to the fore with international companies. This has led to the rising market share of Unilever Vietnam with well-recognized Lipton brand including Yellow Label and Clear Green.
Coffee
Tea
Others
Year 2013 (VND tn)
Soft drinks categories value breakdown
5.3%
11%
52.5%
18.1%
10
8
6
12.1%
6.3
6.9
8.5%
7.4
8.2%
8.0
7.7%
8.6
7.3%
9.2
15%
15.5%
32.6%
6.8%
10%
5%
2
0
32%
33%
Nestle Vietnam
Vinatea
Vinacafe Bien Hoa
Unilever Vietnam
Trung Nguyen
Others
Viet Thai International

2010
2011
2012
Value (VND tn)
2013
2014F
Growth (%)
2015F
0%
Other
Hot coffee market shares
Hot coffee market shares

Coffee sales value and growth

21
IV. TRENDS AND DEVELOPMENT

1. Spirits major Diageo acquires additional stake in Halico:
In June 2012, UK drinks group Diageo acquired an additional 10.62% stake in Vietnamese spirits firm Hanoi
Liquor Joint Stock Company (Halico). Diageo is seeking to capitalize on the robust growth of the branded spirits
sector in Vietnam. Diageos strategy is focused on marketing and brand building, with enormous sums invested
in effective brand communication. It acknowledges the strength of its eight global priority brands in comparison
to the rest of its portfolio and allocates disproportionate levels of marketing investment towards these brands.
2. SMB eyeing regional growth:
Philippine brewer San Miguel Brewery(SMB) has its sights set firmly on the demand potential in the markets of
Cambodia, Laos and Vietnam. The brewer plans to set up three new breweries in these countries, with a planned
investment of around USD 100mn per plant. The Vietnamese beer market is dominated by more established
market players such as Habeco and Sabeco, and it will not be easy for SMB to entrench a strong foothold
against the companies market dominance.
III. COMPANY MONITOR

1. Hanoi Beer Alcohol Beverage
Corp (Habeco):
Habeco is a major Vietnamese brewer and

dominates sales in the north of the country,
particularly in the increasingly affluent city
of Hanoi. In early 2007, Carlsberg acquired
a 10% stake in the company and has since
increased its holding to 16%, making it
Habecos largest single strategic investor.
Carlsberg has access to a number of popular
Western beer brands, and Habeco could look
to bring in these brands to bolster its premium
portfolio and to ramp up its presence beyond
its northern stronghold. For the time being,
however, the firm has focused on economy
brands, which has helped the firm to ward
off international competition and delivered
sustained growth. The firm is also positioning
itself for growth in the spirits markets. In 2008,
through its subsidiary Hanoi Liquor Joint
Stock Company (Halico), the firm entered into
a joint venture with Diageo, the worlds largest
spirits company. The two companies have
joined forces to expand within what remains a
fledgling branded spirits industry and to exploit
the strong growth potential that exists in the
market.
2. Saigon Beer Alcohol And Beverage

Corporation (Sabeco):
Sabeco is Vietnams leading brewer, controlling

around 33% of total beer sales and a far larger
proportion of sales in southern Vietnam. The
state-backed brewer has recently commenced
initial privatization and had planned to offload
around 20% of its shares in order to raise
USD 560mn. Tough market conditions meant
than only 61% of this target was reached,
although this was not seen as a poor reflection
on Sabeco, whose flagship Saigon Beer and
Beer 333 continue to enjoy strong success.
The state currently holds an 89.5% stake in
Sabeco.
3. Regional brewers spreading their wings across Vietnam:

Asia Pacific Breweries(APB) saw strong sales in 2012, with 12% sales growth in Vietnam and Thailand, Just
Drinks reports. The owner of Tiger Beer saw a 9.7% rise in sales to USD 625.24mn and a 27.7% increase
in operating profits to USD 134.04mn. Dutch brewer Heineken recently secured full control of APB after the
shareholders of Fraser and Neave (F&N) voted in favor of the firms USD 4.5bn bid. Japanese brewer Sapporo
has announced that it intends to significantly increase its beer production in Vietnam in the period up to 2019.
Japanese brewer Asahi Group Holdings has announced that it intends to extend its operations across Asia
through a series of acquisitions. Also looking to capitalize on the Vietnamese potential, in 2011, Danish brewer
Carlsberg purchased the remaining 50% stake in Vietnamese brewer Hue Brewery Company.
4. Spirits and Soft drinks potential attracting investors:
US consumer goods packaging supplier Crown Holdings is to open its fourth manufacturing plant in Vietnam
by mid-2013 in a bid to ramp up global production, reports Beverage Daily. The Asian market is proving to be a
very exciting prospect for multinational cognac producers. The leading four global cognac houses, Hennessy,
Rmy Cointreau, Martelland Courvoisier, are all actively seeking out new markets to diversify their presence
beyond China.
5. Coffee potential perking up sector investments:
Masan Consumer in 2011 acquired a 50.1% stake in the Vietnamese coffee producer Vinacafe Bien Hoa JointStock Company. US coffee giant Starbucks recently launched its instant coffee brand in Singapore as it looks to
build a stronger footprint in the Asia Pacific region.
6. Ready-to-drink tea attracts investment:
In September 2012, the Daily reported that Tan Hiep Phat Group began construction of a new plant in northern
Ha Nam province. Deputy director of Tan Hiep Phat Group, Tran Phuong Uyen, was quoted as saying that the
new plants will produce soft drinks of natural origin, doubling the companys existing annual capacity of 1bn liters
per year.
23
Brewing & Beverages Supply Chain

Some key drivers in 21st Century
Ware housing
& distribution
Retail &
Point of Sale
Changes to
manufacturing
footprints
Drive to reduce
out-bound costs
Increasingly
complex
channel
management
Distribution
optimisation &
closer relations to key
distributors
Need for
improved supply
chain visibility.
Move to ERP
standardisation.
Keep it simple
Reverse
logistics
CONSUMERS
SUPPLIERS
Increasing
importance
of collaboration
with suppliers
Manufacturer
PLANNING
Increasing need for responsive supply chain including integration of demand,
supply & reverse logistics.
Move to planning standardisation within multinationals
INFORMATION TECHNOLOGY
Need for improved supply chain visibility. Move to ERP standardisation.
Keep it simple
INCREASING NEED FOR SUPPLY CHAIN PROCESS STANDARDISATION

& RESPONSIVENESS; IT OPTIMISATION NEED
25
REFERENCE
1. ASEAN Food and Beverage markets - Updates and insights from the region by Austrade and
Australia Unlimited
2. Exporter guide: Food and Beverage in Vietnam by New Zealand Trade & Enterprise
3. Data source from Euromonitor
4. Vietnam Food and Drink Report includes BMIs forecast Q1 2013 by M

5. Vietnam Food and Beverage Industry Report by VPBS
6. Soft drink industry and the economic impact of excise tax on non-alcoholic carbonated soft
drink in Vietnam by Dr. Nguyen Dinh Chuc
27

Unit 201, Floor 2, 49 Bui DinhTuy Street,Ward 24, BinhThanh District, HCMC
T: +84 8 2242 7762 - E:info@vietnamsupplychain.com
F: www.facebook.com/vietnamsuppl
ychaincommunity - L:Vietnam Supply ChainForum
www.vietnamsupplychain.com

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Beverage Supply Chain

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1. Vietnam Drink Industry SWOT.............................. 4

II. BEVERAGE CATEGORIES BREAKDOWN

III. COMPANY MONITOR

1. Hanoi Beer Alcohol Beverage Corp (Habeco)

2. Saigon Beer Alcohol And Beverage Corporation (Sabeco)

IV. TRENDS AND DEVELOPMENT

1. Spirits major Diageo acquires additional stake in Halico

3. Regional brewers spreading their wings across Vietnam

Beverage Supply Chain

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1. Vietnam Drink Industry SWOT

2. Beverage sales and growth:

Pepsico, Tan Hiep Phat, URC VN

Nestle, Vinacafe, Vinatea

Source: Euromonitor International, VPBS Research

Currently, 98 percent of alcohol consumption is beer. However, as other alcoholic beverages

Beverage Supply Chain

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3. Beverage value chain:

Common distribution beverage channels

PROCESSOF VALUE CHAIN ANALYSIS

Export Market Channel

4. Beverage distribution channels:

JV HOTELS & RESTAURANTS

STATE-OWNED WINE WHOLESALERS

Farmers (Small, Medium, Larger)

Beverage Supply Chain

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Retail outlets by categories (units)

5. Tax and duties on beverage:

Wine > 20% alcohol

Inbound manufactured products

35% off trade

65% off trade

Special Consumption Tax (SCT)

From July 1, 2015 (Draft)

Source: Euromonitor International, VPBS Research

Beverage Supply Chain

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II. BEVERAGE CATEGORIES BREAKDOWN

Volume (bn liters)

Alcohol consumption volume and growth (litters/ %)

Volume (bn liters)

Alcohol consumption value and growth (VND trillion)

Beverage Supply Chain

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b. Alcoholic drink categories breakdown:

Y2013 (mn liters)

Beer consumption per capita in selected Asia countries

Volume (bn liters)

Alcohol categories value breakdown

Source: Euromonitor International

Y2013 (VND tn)

Alcohol categories volume breakdown

Beer consumption volume and growth

Beverage Supply Chain

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Beer market shares 2013

59% total consumption