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Sabeco to launch first high-end beer in August

Released at: 17:33, 08/08/2017

Sabeco to launch first high-end beer in August

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"Saigon Gold" part of brewer's challenge to Heineken in high-end segment.

by Duy Anh

The Saigon Beer Alcohol and Beverage Corp. (Sabeco) will launch its first ever high-end beer product in August, to tackle the heated competition with local and foreign brewers in Vietnam, Chairman Mr. Vo Manh Ha told its extra-ordinary shareholders meeting on August 8.

The new beer, Saigon Gold, is the latest solution from Sabeco officials to retain its market leading position in Vietnam by expanding into the high-end segment, which has long been dominated by Dutch brewer Heineken and its signature products of Heineken and Tiger.

With an estimated price of VND500,000 ($22) for a carton of 24, each can of Saigon Gold will cost nearly double the price of both Hanoi Beer from the Hanoi Beer Alcohol and Beverage Corp. (Habeco) and its own Saigon Special, which sell for around VND220,000 ($9.7) and VND285,000 ($12.5), respectively, for a carton of 24 cans.

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An expanding Vietnamese middle class and youthful population have helped drive a 300 per cent surge in beer demand since 2002, according to Euromonitor, which estimates that Vietnam’s beer market was worth VND147.2 trillion ($6.5 billion) in 2016. It predicts that per-capita consumption will reach 40.6 liters this year, making Vietnam the biggest consumer of the amber fluid in Southeast Asia.

Growth, though, is not being driven by local beers, which cost about VND5,000 ($0.22) per can or bottle, but by Heineken, which costs ten times as much, at VND55,000 ($2.42). The Dutch brewer has seized on the increasing popularity of high-end products among Vietnamese consumers, driven by the country’s growth.

Heineken’s 2016 sales jumped at least 10 per cent, spurred by Tiger, Chairman and CEO Mr. Jean-Francois van Boxmeer told the company’s annual shareholders meeting in April. Vietnam drove an almost 27 per cent surge in operating profit from the Asia region, he said.

The rising popularity of Heineken may be the sole reason for the two local brewers doubling their advertising spending in the first six months of this year, with both Sabeco and Habeco outlaying a total of more than VND1 trillion ($44 million) on promotional campaigns. Only limited gains in revenue and profit came in return, however.

During the January - June period, Habeco saw a 5 per cent year-on-year increase in total revenue, to VND4.22 trillion ($184.76 million), and a pre-tax profit of VND485.4 billion ($21.35 million). Sabeco, meanwhile, saw total revenue rise 7 per cent year-on-year to VND15.8 trillion ($695 million), but higher advertising costs kept its pre-tax profit at the same level year-on-year, or VND3 trillion ($132 million).

While Sabeco commands the local market, enjoying a 40 per cent market share, or 50 per cent higher than its nearest competitor, Heineken, which has 30 per cent, and well ahead of Habeco, with 18 per cent, the Dutch brewer maintains its dominance of the high-end market, with 67 per cent. 

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