Beer brands pour big bucks into ads as Vietnam bucks global trend
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As more and more Vietnamese drinkers take to beer and competition heats up, leading brands are spending big on advertisements.
Saigon Alcohol Beer and Beverages Corporation (Sabeco), the leading beer producer in Vietnam which brews the well-known Saigon and 333 beers, spent VND1.2 trillion ($52.9 million) on advertising last year.
While this figure is slightly less than its 2016 outlay, it still places Sabeco on the top of advertisement budgets list in the beer industry, spending more than VND1 trillion spent on product promotion in each of the last three years.
Meanwhile the producer of Hanoi and Truc Bach beers, Hanoi Beer Alcohol and Beverage Jsc, known as Habeco, spent VND568 billion ($24.6 million) on ads last year, over 3 times its 2014 expenditure.
The increased spending is a response to Habeco’s declining share of the beer market in recent years, from its heydays of having the most popular brands in Northern Vietnam. The company has been augmenting its advertising budget as “there has been no breakthrough in the marketing activities of the brand,” according to Viet Capital Securities, which claims to provide comprehensive research to assist investors in maximizing profits.
Sabeco, Habeco, along with Heineken and Hue Brewery (which is owned by Carlsberg) made up 90 percent of the beer market in Vietnam last year. The big four are known to spend big on advertisements as they compete with each other in the Vietnamese market, which is considered to have more advantages than other countries.
“While beer consumption in many countries has stalled, there is still a lot of potential for this industry in Vietnam,” said Nguyen Van Viet, president of the Beer, Alcohol and Beverage Association (VBA) in a recent conference.
In China and some European countries, beer consumption has stagnated or even declined slightly. But in Vietnam it is forecast to rise in the coming years, Viet said.
“Sabeco, Habeco, along with Heineken and Hue Brewery (which is owned by Carlsberg) made up 90 percent of the beer market in Vietnam last year.”
He is backed by a study of the Asia-Pacific beer market conducted by Euromonitor, which claims to be the world’s leading independent provider of strategic market research.
The study found that beer consumption in the world has not increased in a decade, but in Vietnam, this figure is increasing rapidly.
In 2008, Vietnam ranked 8th position in beer consumption in Asia, just 8 years later it had climbed to 3rd position, behind Japan and China.
In a market dominated by big players, new businesses are having trouble making a stand. Laser, Fosters and Zorok are among the brands that have tried and failed to gain a decent foothold in the Vietnamese consumer. Local media reports have said that the high costs of advertisements had made it difficult for these firms.
Sapporo, one of the newer entrants, has recorded higher consumption in recent years, but very high marketing costs have seen to it that its profit is not substantial, Viet said.
Last year, Vietnam consumed over 4 billion liters of beer, and a Vietnamese person consumed 45 liters on average, according to VBA. The country targets production of 4.1 billion liters of beer in 2020 and 5.5 billion in 2035.
Questions & Answers
Q.What proportion of the Vietnamese beer market do the top four companies control?
What proportion of the Vietnamese beer market do the top four companies control?
Sabeco, Habeco, Heineken, and Hue Brewery together accounted for 90 percent of the beer market in Vietnam last year. These companies are known to spend heavily on advertisements.
Q.Why has Habeco significantly increased its advertising expenditure?
Why has Habeco significantly increased its advertising expenditure?
Habeco increased its advertising budget due to a declining share of the beer market in recent years. This was a response to the lack of breakthrough in the brand's marketing activities.
Q.How does beer consumption in Vietnam compare to global and regional trends?
How does beer consumption in Vietnam compare to global and regional trends?
While global beer consumption has not increased in a decade and has stagnated or declined in many countries, it is rising rapidly in Vietnam. Vietnam climbed from 8th to 3rd in Asian consumption in eight years.
Q.Why have some new beer brands struggled to establish themselves in the Vietnamese market?
Why have some new beer brands struggled to establish themselves in the Vietnamese market?
New brands like Laser, Fosters, and Zorok have struggled because of the high costs of advertisements, which make it difficult for them to gain a decent foothold. Sapporo, a newer entrant, also faces very high marketing costs.
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