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CASTLE MALTING NEWS in partnership with www.e-malt.com French
26 June, 2022



Brewing news Vietnam: Beer market regaining its fizz in wake of COVID

Vietnam's beer market, one of the largest in Southeast Asia, is regaining its fizz as people head back to restaurants, bars and nightclubs after authorities lifted some of the region's strictest anti-COVID measures, the Nikkei Asia reported on June 25.

That's refreshing news for brewers such as Saigon Beer Alcohol Beverage, commonly known as Sabeco, which is ramping up output of tipples such as its popular 333 brand to meet this growing thirst. It's also a welcome sign that one of Asia's key economies could be easing back to normality after the turmoil of the coronavirus pandemic.

"Finally, we can go out for drinks," said Nguyen Phuong Hoa, a company employee, as she enjoyed a cold beer in Ta Hien Street, the biggest drinking district in Vietnam's capital, Hanoi. "I've been waiting for this for a long time."

In the background, lively cries of "Mot, hai, ba, yo!" (One, two, three, cheers!) regularly rang out from people crammed almost shoulder to shoulder at the dozens of stalls and restaurants in the area on an evening in June.

And, after the government in March opened Vietnam's borders to visitors from abroad, demand has also been swollen by the gradual return of foreign tourists.

"We have steered through a very difficult 2021, while keeping our employees, partners and community taken care of," said Neo Gim Siong Bennett, general director of Sabeco, Vietnam's largest beer producer. "With the COVID-19 situation improving, barring further escalation in the Ukraine-Russia war, 2022 looks promising."

Sabeco has spent about 650 billion dong ($28 million) installing cutting-edge filling equipment at a plant in central Vietnam, helping expand its annual beer production capacity to about 250 million liters. It says those volumes mark an increase of about 150% from 2010.

The company is targeting consolidated revenues of about 35 trillion dong in 2022, up 32% from the year before, with consolidated net profit rising about 17% to 4.5 trillion dong.

Analysts at the Vietnamese unit of South Korea's Mirae Asset Securities wrote in a note that they expect Vietnam's drinks industry to thrive with beer consumption "especially likely to come close to pre-pandemic levels."

Thai Beverage is Sabeco's parent after it bought about 53% of the outstanding shares in the brewer from Vietnam's government for the equivalent of about $4.8 billion in 2017.

Vietnam is the No. 1 beer consumer in Southeast Asia and the ninth biggest in the world, according to Japanese drinks company Kirin Holdings, with demand likely to grow further as a large young population reaches adulthood.

Sabeco's 2021 net profit fell 20% from a year earlier to about 3.9 trillion dong as the coronavirus cast its shadow, the lowest since the company came under ThaiBev's control.

Sabeco has also suffered from loose cost management, a negative legacy from its time under state control. It is now working to digitize business processes such as inventory management, sales and logistics.

Brewers may also have to prepare for tighter government controls on the sale of alcohol as the market develops. Authorities introduced new penalties for drunken driving in early 2020, although these have not always been strictly enforced.





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