Of the approximate 3 billion litres of beer that will be drunk in Vietnam this calendar year, around 25 percent of it will have been consumed this month. It’s a statistic I’m made aware of by Joshua Lee, a now Singapore based advertising executive who previously worked in Ho Chi Minh City with Vietnam Brewery Limited, maker of Danang’s Larue and custodian of imports Heineken and Tiger. Tet is that time of the year he says when even those with limited budgets tend to stock up, and the individual bottle or can is replaced by the carton — something the breweries are well aware of.
At such a time, Josh sums up how the man on the street makes his choice. “There’s only two things that have ever really mattered when it comes to beer,” he says, “taste and image.”
His words do have a ring to them, and certainly the prevailing beer culture of today’s Vietnam tends to support the latter especially. This is a place where branded beer dispensers known as ‘towers of power’ are displayed like trophies on tables, where promo girls — walking billboards if you will — encourage a ‘convivial’ atmosphere, and where hordes of twenty-somethings jump all over each other. Yes, I’m taking about beer clubs — beer's coming out party — which has been well and truly upon us for the best part of the last two years.
The Big Shot
However, the big players have been circling around the potential of Vietnam for much longer than that. 90 million people with a growing middle (no pun intended) will tend to make that happen. Fast moving consumer goods companies like Unilever and P&G quickly saw Vietnam as an opportunity after reunification, so it’s no surprise that the beer makers have followed.
San Miguel and Carlsberg have been here for 20 years. Vietnam is the largest market in the world for Tiger, and the third largest for Heineken, who have dominated the premium space. Sniffing a win themselves, this year the big daddy of them all, AB Inbev — owner of Budweiser, Becks and Stella Artois — are planning their own assault. CEO Carlos Brito said this to reporters after the company's shareholder meeting almost two years ago: “We think our global brands have a big appeal, especially Budweiser... so we think (Vietnam) is a natural place to go after our position in China.”
Another brewer that only recently made its entry, Japanese premium brand Sapporo, has also been making an impact — challenging the market leaders. They’ve rode the ups and downs of a sluggish economy, the arrival of beer clubs, and the Vietnamese obsession with ‘premium’. They’ve also invested US$75 million in their own brewing facility in Long An.
“We wouldn’t enter the market any other way,” says local general director Hirofumi Kishi when we meet. Before Sapporo set up shop he tells me they spent two years conducting a series of surveys to make sure Vietnamese tastebuds were ready for the oldest brew in Japan. Hirofumi sums up why they were in two words: “Japanese quality.”
He explains, “Vietnamese drinkers want a premium brand that’s expensive. It’s good for their mentality. They also trust Japanese products, so that’s why we had to make our own facility here, so that our product can be made exactly to our standards, and we can protect the reputation of the brand.”
And what of the competition? “Every year beer consumption in this country grows by 10 or 15 percent, and the market itself gets bigger, so every year there’s a brand new set of customers to focus on. We’re not scared of anyone else.”
Famous brands like Sapporo, Heineken and Tiger are all well and good — staples of the convenience store. All offer a choice to thirsty drinkers, and a way for brand-conscious consumers to identify themselves. But is it really much of a choice?
Michael Comerton is the Irish brew master behind Platinum Pale Ale — what he describes as an aromatic Australian-style pale ale. So far distributed in about 30 venues in Saigon, including places like Quan Ut Ut, Boomarang and Caravelle, it’s a year-old business that’s starting to turn a profit.
Given his pedigree, I’m not that surprised. Michael is legitimate beer royalty. He created one of Australia’s favourite premium ‘session beers’ while at Lion Nathan in Sydney — the James Squire Golden Ale. The affable Irishman believes that the market here is hitting saturation point. “Already we have Sabeco, Carlsberg, VBL, Sapporo and San Miguel in Saigon. Huda is in Hue, Habeco is in Hanoi, ABI are coming… I don’t think all of them will be here in two years.”
Implied in his words are that in the rush for market share — which shareholders demand — discount wars between the big players are inevitable. This devalues the market as a whole he says, knocking profit margin out of the game, and making it harder for the little guys like himself to compete. Venues will be the winners in the short term Michael says, as they can demand a whole lot more for less. However, it’s the consumer who ultimately suffers, missing out on the diversity of product that we see in established beer markets in the west.
He stresses the need for what he calls ‘education’ in an emerging market, “We’re producing a premium end product that tastes completely different to the beers Vietnamese are used to drinking. It’s a brand new flavour profile. So we expect to grow with them as the market matures, and drinkers here become more acquainted with premium beers made from real ingredients.”
Our anonymous restaurateur/publican has also seen the market develop over the past few years, but has a hard time believing mainstream tastes will extend to anything more than lager — at least not for the time being. I ask him if his assessment pours cold water on the beer ambition of new entrants.
“It’s like wine,” he says. Most of his customers “don’t know the difference between a bottle of Dalat and a 1980 Coonawarra”, so they get embarrassed and lose face. “You don’t want to do that to your primary customer base, they’ll stand up and walk out. The same applies to beer.”
So what do restaurateurs get out of the beer game? I ask him. “It’s an extra,” he says, “and it’s all based on relationships.”
Though our man’s restaurant doesn’t go through the same volume as the average beer club, the bar is still an important place for beer companies to be represented — and he knows that — and his response seems to confirm the thoughts of our Irish brew master.
“There’s so much competition, I know I can get a lot of out them, so I do. It’s important to them that they be in my location. If a company like Diageo for example can afford to pay US$150,000 to get David Beckham to come to Chill for an hour, I don’t feel bad about hitting them up for a few extra uniforms.”
So what of the overall market in Vietnam then? Do 90 million waistlines with an expanding thirst for the amber nectar automatically guarantee brand success? No. And while the streets are littered with stories of individuals trying to import their favourite crafty brew from home, only to be defeated by import tax and a market that simply won’t pay beyond a well established ceiling price — remember, this remains a country where by far the most consumed beer is bia hoi — its not just niche brands that don’t work.
If names like Kronenburg (too strong), Coors Light (wrong colour) and Miller High Life (badly marketed) can fail, it’s clear that there’s more to it than just turning up in the city and telling people ‘we’re here!’
Our man in Singapore Joshua Lee heeded a final warning for foreign brands with an appetite for Vietnamese success. “Beer is like a protection racket. Most people will drink what everyone else around them is drinking, especially here where people always drink together. (So) if you’re trying to convince someone to drink something else, it’s a hard task. Therefore, for the international brands who don’t consider the uniqueness of the market, who don’t adapt their strategy and product offering, it’s no guarantee that people will accept their brand, because often their ‘international personality’ has absolutely no relevance here.”