Beer Markets: The Rise of Viet Nam

Frank Koh is vice president – Beverage Cans, S.E. Asia at CROWN Asia Pacific Holdings Ltd

IN A RELATIVELY short period of time, Viet Nam has risen to become one of Asia-Pacific's more important bases for manufacturing, with many companies placing operations in the country in recent years. This is in part due to the cost effectiveness of doing business in Viet Nam as well as a supportive government that encourages investment. These factors, combined with a favourable economic climate, positions Viet Nam as an attractive alternative to the fiercely competitive Chinese landscape.

Viet Nam is Asia's third largest beer market after China and Japan, and it is the largest within South East Asia1. Despite having one-tenth of China's population, the Viet Nam market is full of potential. That's in part due to an average age of only 27.82 and a birth rate of approximately one million per year. Along with this large, youth-oriented population, Viet Nam is also seeing a rise in disposable income and an increase in tourism, helping drive up the volume of beer produced and consumed each year. Let's look at production first. In the latest Kirin report on global beer consumption, published in 2010, Viet Nam is named as one of the top 25 markets in the world. The country has moved up steadily in the rankings, coming in at number 30 in 2000 and moving up 17 places to number 13 in 2010. Whilst China has maintained the number one spot on the list, it reported only 6.3% growth in beer production between 2009 and 2010, whereas Viet Nam experienced an increase of 15.2%3. In terms of consumption, government estimates predict that demand for beer in Viet Nam will more than double by 2020, reaching 5.8 million kiloliters from 2.6 million kiloliters in 2010.

With such a strong outlook for the market, it's no wonder large brewers are either opening new facilities or expanding production in Viet Nam. For example, in May 2011, Asia Pacific Breweries (APB), one the region's largest brewers, announced plans increase capacity in its Ho Chi Minh City plant4. In addition, two of Japan's largest brewers – Kirin and Asahi – have already started moving into Viet Nam. At the end of last year, Japanese brewer Sapporo also announced its decision to expand production in Viet Nam due to declining Japanese demand5. Viet Nam is also an important market for Heineken, being its third largest market after the U.S. and France. This emerging market is expected to be the company's second largest market by 2012, and by 2015 it may well be its biggest market6.

The role of packaging

In developing countries in Asia, brand owners have traditionally favoured beverages packaged in glass bottles. However, there has been a marked shift to metal packaging, particularly as what used to be considered “local” products expand their reach and brand owners need a more reliable, cost-effective packaging solution that minimises the risk of breakage and product spoilage during transportation. The durability of metal packaging satisfies this need and means cans require only minimal secondary or transport packaging during shipment. Metal packaging also offers a powerful barrier against light and oxygen, helping extend shelf life and preserve the freshness and taste of beverages. The format also offers a level of production efficiency that is unmatched by other packaging formats.

Consumers appreciate beverage cans because they are convenient, portable and require no refrigeration. They also meet the growing demand for environmentally friendly packaging. Metal is 100% recyclable and infinitely recyclable, meaning it can be recycled again and again without loss of or alteration in quality. In addition, the beverage can is the most recycBest Seller