Vietnam's Positioning within the Asian Market
Within the last 10 years, brewing in Vietnam has boomed, positioning them as one of the largest producers and consumers of beer in the Southeast Asia region, this growth shows no sign of slowing. Noted as the fastest growth beer market among its neighbouring Asian countries, Vietnam recorded an impressive compound annual growth rate of 25% from 1999 to 2019. There are several explanations for this, but the most prominent is economic factors. From 1999 to 2019, Vietnam’s GDP per capita climbed by a factor of 9.5, from $367 to $3,491. This means that the country’s population has more disposable income to spend on luxuries. Urbanisation has also contributed to beer consumption growth, with more people moving to urban areas, where social drinking is more common, so naturally consumption has risen.
In 2023, Vietnam’s annual beer consumption reached 4.95 billion litres, accounting for 2.7% of the global market. This achievement places Vietnam at the forefront in the ASEAN region. This figure was only surpassed by China at 37.6 billion litres. The growth is driven by economic advancement, urbanisation and changing consumer preferences.
This shows Vietnam’s solid foundation for the brewing industry within the country and highlights potential opportunities for local breweries to scale up production, innovate and introduce new products, and increase their market share.
Factors Impacting the Success of Vietnam's Brewing Industry
While the brewing industry has contributed $5.031 billion in revenue in 2023, there has been several factors contributing to challenges within the industry. The rising raw material costs as a result of disruptions in the global supply chain, rising inflation rates and interest rates have had a significant impact on brewers and how they conduct research and development, shipments and deliveries and maintain quality recipes. However, the most crucial factor that has transformed Vietnam’s beer market is the implementation of ‘Decree 100’ in 2020. ‘Decree 100’ imposes heavy sanctions for driving with a high concentration of alcohol in the blood or breath, thereby impacting the industry. For those found with an alcohol concentration level of 0.4mg in 1 litre of breath or 80mg in 100ml of blood will be given a fine of 40 million VND, equivalent to over 1,400 EUR. Their licences will also be revoked for 22-25 months. With more stringent regulations in Vietnam, the populations’ consumption has since seen a decrease with individuals becoming more careful with their alcohol consumption.
Nonetheless, there are signs of the beer industry improving as a result of their rising population growth rate and steady economic growth. KPMG noted Vietnam’s middle class is projected to encompass up to 60% of the population by 2027. In line with this demographic shift, the premium beer segment is expected to grow alongside the overall sector.
Currently, much of the market is dominated by four brands; Heineken (36.6%), Thai Beverage (35.1%), Habeco (11%) and Carlsberg (6.2%). While they hold a significant part of the market, there is no sign of saturation yet leaving plenty of opportunities for other breweries to grow or for new entrants to make their move. Consumers are drinking more at home because of ‘Decree 100’ and the aftereffects of COVID-19, so are purchasing quality, premium beer.
What Does This Mean for Brewers?
As consumers are spending more on beer, brewers must create something new and encourage consumers to try it. Premiumisation and brand creation are essential, to differentiate from the key players.
'In recent months, we have seen brand creation particularly in stouts and darker beers.' - Sagar Goswamy, Sales Manager for APAC region
The essence of premiumisation lies in enhancing a mother beer recipe to deliver a more elevated experience to consumers. This can include investing in high quality materials, colour enhancement, new flavours, a focus on quality assurance, enhancing mouthfeel and highlighting the craftsmanship of the beer.
Our clean label malt extracts can aid you in this process.
PureMalt can enhance existing recipes to brews by adding a premium mouthfeel. Our ingredients provide brewers with solutions to develop various beer styles from their existing mother beer. We can use pale, crystal and roast malt to create products with unique colour and taste profiles. Aiding in rapid development through late-stage addition, we can significantly reduce new product development timelines for brand creation. This can be a highly flexible and effective way to develop new beer styles or add colour and flavour to existing brews.
Our unique tools such as our Flavour Wheel and Beer Style Guide can also help you ideate new beer styles. Make sure to try them out! Click the image below for a walkthrough demonstration on how to use them presented by Sagar.
If you are interested in learning more, Let's Talk.