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Habeco seeks broader appeal

Released at: 11:28, 15/06/2019

Habeco seeks broader appeal

Photo: Viet Tuan

Brewer Habeco has announced a new brand identity in a bid to improve its coverage and image.

by Nghi Do

Habeco, Vietnam’s third-largest beer brewer, announced the adoption of a new brand identity in early May to reposition itself in the market. The new identity is part of the new development strategy of the State-owned brewer to adapt to the fierce competition in the country’s beer market. “2019 is the year we undertake a new journey in our development,” said Mr. Tran Dinh Thanh, Chairman of the Board of Directors. “We need to differentiate ourselves and not only focus on quality.”

Behind the change

The decision to adopt a new brand identify comes on the back of declining profits over the last five years, despite the local beer market growing steadily. Habeco’s products target mostly the mid-end segment, while consumers are drifting towards higher-end products. 

Habeco almost exclusively holds the 450 ml bottled beer market, as other domestic and foreign brewers have concentrated on 330 ml bottles. But this advantage has done nothing to help it maintain and develop this market. It has acknowledged that consumption of 450 ml bottled beer is declining, leading to business results lower than its competitors. 

Volumes and revenue have continued to fall this year. After-tax profit in the first three months of 2019 was down 42 per cent year-on-year and has significantly declined over the last five years, its annual reports reveal. The figure fell to VND484 billion ($20.7 million) in 2018 from VND1.1 trillion ($47 million) in 2014. In terms of volumes, the major consumption markets of the company in the northern and central regions increased 3 per cent in 2018 against 2017, while its market share has fallen from 20 per cent in 2010 to 16 per cent in 2018. 

Lower expectations

Mr. Thanh acknowledged that the local beer market is fiercely competitive and leading global brewers have appeared in the north and made major investments. Habeco has seen its market share in the north, where it has traditionally performed well, down over the years. It therefore plans to grow its market share in the southern and central regions and the central highlands, while also boosting its exports, to increase coverage. “When coverage increases, brand value will also increase over time,” he said. “If we do not expand but only stay in the north, our market share will fall. We introduced nationwide sales distribution in April, and consumers in the Mekong Delta and central highlands have begun drinking Hanoi beer.” 

In the 2019 plan presented to its recent annual general meeting, the company announced a total production target of 438 million liters, including 434.5 million liters of beer and 3.6 million liters of mineral water. Total revenue is to reach VND8.27 trillion ($353.5 million) and pre-tax profit VND384.5 billion ($16.4 million). After-tax profit, meanwhile, is forecast to fall 36 per cent year-on-year to VND310 billion ($13.3 million); the lowest for more than a decade. With this lower expectation, the company this year will not focus on taking market share but instead invest in building modern distribution channels, sales management, product line restructuring, and marketing campaigns, to penetrate into new markets. “Once we gain a new position along with wider coverage, we will focus on boosting market share,” Mr. Thanh said. 

While declining to reveal how much the company spent on launching the new brand identity, it has great expectations over the move. The message in the new brand identity is that the brand’s development will accompany development in Hanoi. “The new image is modern without depending on traditional values,” Mr. Thanh told VET. “Our brand identity is in line with new trends and will help consumers easily identify and remember Habeco.” The new logo includes golden Houblon flowers in a star shape, as a symbol of the brewer’s essence. The main green color represents nature, freshness, and strength in constant development. 

According to Mr. Hiroki Ito, General Director of Dentsu Vietnam, one of the four largest brand consulting companies in Vietnam, Habeco has major assets, including Truc Bach and Bia Hoi Hanoi, but proper investment and implementation is needed for the new strategy to be successful. 

Altering perceptions

After surveying young Vietnamese consumers in Hanoi and Ho Chi Minh City about their recognition and the image of beer brands, Mr. Kengo Kurokawa, Founder and CEO of Asia Plus Inc., an online market researcher, said that Heineken, Tiger, and Bia Hanoi are the top 3 best-recognized brands, followed by Sabeco products. Heineken has an image of “good premium” and “good taste”, while Habeco and Sabeco products are considered good economical beers. Vietnamese have come to have more choice in terms of beers. Premium segments have been taken more by foreign beer brands such as Heineken, Sapporo, and Budweiser among youth, while Sabeco and Habeco are considered more as economical alternatives for home or volume drinks, he added. 

Young Vietnamese enjoying a wider variety of beers is an opportunity for brewers to approach the premium segment. But it’s not easy to quickly change perceptions and the image of the brand, as premium brand drinkers already have a solid brand preference. They feel happy and comfortable with drinking beer with the Heineken or Sapporo or Budweiser name on it, so it will be difficult to break into the segment, as Habeco and Sabeco are not brands that people feel proud drinking. 

Carlsberg Vietnam believes it will be a challenge for local brewers to approach the high-end segment. With a long history and rich heritage and advanced technologies and business models, foreign brewers certainly have the upper hand when it comes to consumer awareness. 

Annual beer consumption in Vietnam leads in Southeast Asia and its 90-million strong population brings lucrative profits to brewers, according to the VBA. The industry is characterized by a growing population and rising number of middle to high-income consumers, as well as foreign brewers investing in the country.  

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