Vietnam, the third biggest Asian beer market with an average annual growth rates of seven percent in the last five years is ready for its last battle. The Vietnamese government announced last week that it will divest all of its shares of the nation’s two leading breweries Saigon Beer Alcohol Beverage Corp. (Sabeco) and Hanoi Beer Alcohol Beverage Corp. (Habeco). This comes rather surprisingly to most observers because not long ago state officials ruled out this option.
Sabeco (brand names: Saigon Beer and 333 Beer), ranked 20thof the world’s largest beer companies, and to a lesser extend also Habeco (ranked 34th) are said to the most interesting takeover targets in the international beer market which are left over after a strong period of consolidation in the last decade. Vietnam’s population with a legal drinking age of 18 is expected to increase by almost 4 million this year, according to Euromonitor. This makes Vietnam the 8th largest beer market in the world with a volume of about 38 million hectoliters in 2015. 129 brewing plants already operate across the country.
According to the official announcement, the government plans to sell its entire 89.59 per cent stake in Sabeco for US$1.8 billion in two steps. A 53.59 per cent stake will be sold in an auction this year, the remainder in 2017. Habeco will be divested in one step still this year for $404 million. In order to prepare the sale, the Vietnamese Ministry of Industry and Trade is contemplating a listing of both companies on the Ho Chi Minh City Stock Exchange, where the country’s largest blue chips are listed.
Among buyers most interested in the fast growing 70 million people Vietnamese market are Thai Beverage PCL, Singha Corp., Asahi Group Holdings Ltd., Carlsberg A/S and Heineken NV. The world largest brewer AB InBev who is also said to be interested, might still be tied up with the takeover of world’s number two brewer SABMiller and is most likely not bidding for one or both of the companies.
Just a few weeks ago Heineken acquired Carlsberg Vietnam Brewery-Vung Tau in the south Vietnam port city, bringing the Dutch brewer to a 20 per cent market share, slightly ahead of Habeco’s 17 per cent. Additionally Heineken holds a 5 per cent stake in Sabeco, which in turn clearly leads the Vietnamese beer market with a share of 46 per cent.
The sale of the brewery in the south of Vietnam will allow Carlsberg to concentrate on its existing territory in the northern part of the country, as the Danish’ brewers Chief Executive Officer Cees’t Hart puts it – most likely a hint to Carlsberg interest in increasing its present stake of 17.23 per cent stake in Habeco, which it bought in 2008. In 2012 Carlsberg already wanted to buy a further 13 per cent from the government which was opposed by Habeco’s general director Nguyen Hong Linh, who showed disappointment in the partnership, because “Carlsberg as a strategic partner has not brought any benefit to Habeco.” For choosing its strategic partners, Sabeco has put forth stricter contract terms, in order not to follow in the footsteps of Habeco.
Last December, Singha Asia Holdings, a unit of Thailand's Boon Rawd Brewery, signed a $1.1 billion strategic deal with Vietnam's Masan Group to buy 25 percent of Masan Consumer Holdings and 33.3 percent of Masan Brewery, which was formerly known as Orchid Consultant Company and produces beer under the brand name Su Tu Trang.