E-Malt.com News article: 3639

Vietnam: Asia Pacific Breweries Limited (APB), based in Singapore, has received the necessary approvals to expand the production capacity of its brewery in South Vietnam by 50% from 1.5 million hl to 2.3 million hl. The expansion is expected to cost €38 million (approximately US$45.6 million) which will be funded by the brewery. The expansion is targeted for completion in 2006.

"Vietnam, as part of the IndoChina geographical segment, has consistently been one of the key growth markets for APB," said Mr Koh Poh Tiong, Chief Executive Officer, APB. "Our goal is to further tap into the robust beer market and reap the returns presented by the rapidly expanding economy there. However, Vietnam Brewery Limited (VBL) is running at full capacity; this is limiting our growth in the market. Therefore, we are very pleased to be granted the approval to expand our production capacity there."

"The approval is timely as the increasing affluence amongst the Vietnamese has resulted in greater sophistication amongst its drinkers. This has led to more drinkers switching to premium beers," elaborated Mr Koh. "Vietnamese are familiar with our Tiger and Heineken beers which were first brewed by VBL more than ten years ago. Both lagers are the undisputed market leaders in the premium beer segment and we will seek to strengthen their leadership positions with the impending increase in production, made possible by VBL's expansion in capacity."

The South Vietnam brewery is the first of APB's two forays in Vietnam. With the expansion, total investment capital would reach US$140.5 million. This is VBL's second capacity expansion since it first began commercial operation in 1993. Its first expansion took place in 2001 from 500,000 hls to 1.5 million hls at the cost of US$44 million.

Encouraged by the success of VBL, which initially oversaw the whole Vietnam market, APB built a second brewery in Vietnam when it pressed on with its second wave of regionalization efforts. Hatay Brewery, situated outside Hanoi, began commercial production in late 2003 and took over the North Vietnam operations. Despite the increase of APB's total production output with the commencement of Hatay Brewery, VBL's capacity expansion continues to be vital for the brewery to leverage on the upswing of Vietnam's economy. The beer market in Vietnam is expected to enjoy double digit growth.

VBL's latest expansion is another milestone to APB's successful early regionalization strategy, as well as reinforced commitment and continued confidence in the Vietnam beer market. APB is one of Vietnam's earliest foreign investors and is also named one of the top five foreign direct investments by Singapore-owned companies in Vietnam by International Enterprise Singapore.

Vietnam Brewery Limited is a 60/40 joint venture between APB (a joint venture between Heineken and Fraser and Neave) and the Saigon Trading Corporation of Ho Chi Minh City (Satra). It was established with an initial investment capital of US$49.5 million in 1991. Capital was boosted to US$93 million in 2001 when VBL expanded its brewing capacity from 500,000 hls to 1.5 million hls, in order to meet rising demands. Total investment capital would reach US$140.5 million, with VBL's production capacity increasing to 2.3 million hls. VBL Employs over 500 staff at its Head Office in Me Linh Point Tower, District 1, Ho Chi Minh City, and a state-of-the-art brewery in Thoi An, District 12, Ho Chi Minh City. It operates out of four sales depots in Ho Chi Minh City, Can Tho, Nha Trang and Da Nang.

In 2003, the Vietnam beer market registered 10.7 million hl. Vietnam, dubbed as the fastest growing Asian economy outside of China currently, registered a GDP growth of 7.2% in 2003 and is likely to maintain a similar rate for at least another two years.


12 November, 2004