ForEiGn firms EyE up ViEtnAm’s stAtE BrEwErs
VIETNAM – Sloshed back at rowdy open-air “bia hoi” day and night, beer is Vietnam’s tipple of choice and now its cash-strapped government is drawing on the nation’s penchant for lager to raise billions of dollars by selling stakes in state-owned brewers. The unprecedented divestments in two state crown jewels, the makers of the much-glugged Saigon and Hanoi beers, are expected to net as much as $2.2 billion. The sale comes as part of long-promised reforms to privatize bloated state firms, which official figures show contributed about one third of the country’s GDP last year. It is hoped the reforms will set the communist country back on track to meet its ambitious economic targets and jump-start growth that has slowed this year. For Vietnam’s government, beer is a logical place to start. With a population of 93 million people, the country is one of Asia’s leading swillers of suds. Vietnamese consumed more than 3 billion liters of the cold stuff last year, according to marketing firm Euromonitor. That thirst has piqued interest from foreign brewers eager to tap growth markets at a time when sales in many developed markets in Asia are forecast to plateau. “Vietnam has one of the fastest-growing beer consumption markets in the world, and that’s obviously an appeal,” said Kevin Snowball, CEO of PXP Vietnam Asset Management in Ho Chi Minh City. The government said this month the two companies, Habeco and Sabeco, would be listed in the first three months of 2017 and would be open to local or foreign bidders. For the Vietnamese who crowd into the open-air bia hoi markets during lunch, dinner and for some, in between, privatization promises to keep the good times rolling — as long as the buyouts don’t mess with flavour. Some major names already have a foothold here — Heineken has about 17 percent of the market, competing with other players like Carlsberg and Sapporo — and reports say Thailand’s ThaiBev and Singha Beer may now be ready enter the fray, too. But the sales could instantly transform a foreign buyer into a top brewer: Sabeco enjoys about 45 percent market share, while Habeco has 17 percent, according to Euromonitor. The government says it will sell its 90 percent stake of Saigon Beer Alcohol Beverage Corp. (Sabeco) for $1.8 billion, and its 82 percent stake in the Hanoi Beer Alcohol and Beverage Joint Stock Corp. (Habeco) for $400 million. Both companies declined to comment. Economists say the government is selling the stakes because it is thirsty for cash. Public debt hit 62 percent of GDP this year according to official figures, and is climbing closer to the governmentsanctioned debt ceiling of 65 percent of GDP. “It’s the right time for the government to consider selling a number of state-owned companies to get more for the budget,” economist Pham Chi Lan said.
A man walks past kegs of beer at a brewery of state-owned Hanoi Beverage Co. (Photo: AFP)