SABMiller signs Vietnam beer venture

By Chris Mercer

- Last updated on GMT

Related tags Ho chi minh Vietnam

SABMiller has signed a joint venture deal with a top Vietnamese
dairy company, hoping to use the firm's local knowledge and
distribution network to break into Vietnam's emerging beer market.

SAB said the new $45m (€37m) joint venture with Vietnam's Vinamilk aimed to have a greenfield brewery up and running by 2007 in the country's southern Binh Duong province.

The brewery's initial capacity would be 50m litres, with the option of doubling this if all goes well.

SAB will take a 50 per cent share in the venture and hopes to take advantage of Vinamilk's strong market position. It has a 70 per cent share in milk and related products and beverages.

"Vinamilk has an extensive distribution network, which will give us access to more than 20,000 outlets in southern Vietnam which retail beer,"​ said André Parker, SABMiller's Africa & Asia managing director.

The brewer said Vietnam was one of the fastest growing beer markets in the world. It cited Vietnamese Ministry of Industry estimations that beer market volume grew from 1.3bn litres in 2003 to 1.5bnl in 2005.

SAB said its first job would be to develop a mainstream Vietnamese beer brand, starting in the south of country, although this would be joined by one of the group's premium international brands.

Vietnamese beer consumption remains fairly low. Each person drinks around 12 litres on average in a year, compared to 22 litres in China, 85 in Denmark and 121 in Germany.

Yet, Asia Pacific's growing thirst for beer has caught the attention of all international brewers in recent years, and analyst group Goldman Sachs​ last year predicted the region would show the fastest beer market growth up to 2010.

Vietnam has turned heads on its own too. US can maker Crown Beverages announced a couple of weeks ago it would almost double production at its Ho Chi Minh City plant by the year-end to meet rising demand for canned drinks in Vietnam.

More than 200 new beverages launched in the Vietnamese market in the first ten months of 2005, nearly doubling that of 2004, according to a survey conducted by Asia Panel TNS Vietnam.

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