Vietnam: Beer industry increased 8-12% year-on-year over the last five years

The beer brewing industry has become an attractive field for investment with more projects awaiting licensing and many operational plants planning to increase production, VietNamNet Bridge released July 31.

In 2005, Vietnam produced 15 million hl of beer, an increase of 25% over the target volume. The figure is expected to rise to 17 million hl in 2006.

The brewing industry has posted impressive growth of 8-12% per annum over the last five years. In 2004, total beer output reached 14 million hl, or 17% more than the volume targeted for 2005. The average consumption volume per capita now is 17 litres a year, double the volume in 1997.

It is expected that by 2010, total beer output would be 25 million hl/year, or output per capita of be 28 litres/year.

More investors are investigating beer production as a viable option. At the end of June, the Ministry of Planning and Investment granted license to a brewery in Binh Duong province, a joint venture between the Vietnam Dairy Products Joint Stock Company (Vinamilk) and the Netherlands’ SAB Miller. Once operational, which is scheduled for this year’s end, the plant will put out 100mil litres of beer per annum.

On July 20, the Hanoi Beer, Liquor and Soft Drink Corporation began construction of its new plant in Vinh Phuc Province. The plant will have the capacity of 100mil litres a year in the first phase of operation before it reaches full capacity of 200mil litres in a few years.

Vietnam has market potential with its population of 80mil people, which means increased demand for drinks as income per capita increases. According to the Ministry of Industry, the total investment capital slated for breweries will reach VND10,580bil ($661.25mil) by 2010.

One of the biggest problems for authorities is the existence of many low output home brewing facilities that use out-of-date technology prone to product contamination. Nineteen plants put out 20mil litres a year, 15 other plants have the capacity of 15mil litres or more, while 268 of the home-brewers have capacity of less than 1mil litres a year.

There were 469 registered home-brewers at the end of 1998, however, many were forced to cease operations and the number reduced to 329 in 2004.

Home-brewers are located mainly in the South-eastern provinces, provinces in the Red River Delta, and in the central region. Only 15 provinces have no such breweries.

HCM City is the biggest beer producer, producing 23.2% of the total capacity, followed by Hanoi (13.44%), Hai Phong (7.47%), Ha Tay (6.1%), Tien Giang (3.79%), Hue City (3.05%) and Da Nang 92.83%).

An official from the Ministry of Industry said that strict control would be maintained over the establishment any new brewery. Investors will have to obtain permission from the Minister of Industry to found a brewery that produces more than 25mil litres a year, while projects producing more than 50mil litres of beer a year must be approved by the Prime Minister.

Investment projects:

SABMiller Vietnam (Binh Duong Province): 100mil litres/year
Hanoi Beer, Liquor and Soft Drinks (Vinh Phuc Province): 200mil litres/year
Saigon Beer, Liquor and Soft Drinks (Cu Chi district, HCM City): 200mil litres/year
Vietnam Brewery Company: raising capacity from 150mil to 230 mil litres/year
Hue Brewery Company: 50mil litres/year
Dong Ha – Huda Joint Venture: 30mil litres/year
Foster's Da Nang: raising capacity from 45mil to 85mil litres
San Miguel: raising capacity from 20mil to 50mil litres/year
Vilaken Nghe An: 100mil litres/year
Tan Hiep Phat Company (Binh Duong Province): raising from 100mil to 150mil/year
Quy Nhon Brewery Company: raising from 20mil to 100mil litres/year

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