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Australia's leading brewer eyes Vietnam's SABECO and HABECO

July 26, 2017 | 10:31

(VNF) - Australia’s leading brewer, Carlton & United Breweries (CUB), has expressed its willingness to acquire shares in two biggest brewers of Vietnam: Saigon Beer Alcohol Beverage Corp (Sabeco) and the Hanoi Beer Alcohol Beverage Corp (Habeco).

(VNF) - Australia’s leading brewer, Carlton & United Breweries (CUB), has expressed its willingness to acquire shares in two biggest brewers of Vietnam: Saigon Beer Alcohol Beverage Corp (Sabeco) and the Hanoi Beer Alcohol Beverage Corp (Habeco).

Australia's CUB eyes Vietnam's top two brewers

The 82 per cent holding in Habeco is valued at $404 million, MoIT estimates

According to CEO of CUB Jan Craps, the company wants to become a strategic investor of Vietnam’s two prized brewers since the beer consumption in the country is on the rise.

CUB also has plans to expand its brewery in southern Binh Duong province, Craps told Deputy Prime Minister Vuong Dinh Hue during his visit to Australia on July 24.

Both Sabeco from Ho Chi Minh City and the Hanoi-based Habeco will submit plans to the government this month on their equitization process, with stakes slated to be sold later this year, an official from the Ministry of Industry and Trade (MoIT) told local media last week.

MoIT valued its 89.59 per cent holding in the country’s top brewer, Sabeco, at $1.8 billion last August. The 82 per cent holding in Habeco is valued at $404 million, MoIT estimates.

Sabeco’s shares have increased 11 per cent over the last week against the backdrop of news regarding the timing of its equitization, while Habeco’s jumped 8.7 per cent. Meanwhile, Denmark’s Carlsberg, which owns 17.51 per cent in Habeco, says it has first right of refusal on the stake, has been in tense talks with the ministry about the sale.

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

“Vietnam will be the market to watch,” Euromonitor said in a July report on the beer market in the Asia-Pacific region. “Thanks to the strong street consumption culture and rapid urbanization, Vietnam is forecast to see the largest volume growth in the 2016-2021 period.”

Vietnam’s top brewer Sabeco posts record profit in 2016

Sabeco reported a profit of VND4.6 trillion ($205 million)

Vietnam is one of Asia’s largest consumers of the beverage, with a young, beer-loving population, which has put it on the radar of international brewers. The country’s beer market grew at an average compound annual rate of 7 per cent from 1999 to 2015 and hit 4 billion liters in 2016. Growth is anticipated at around 4 per cent to 2021, data from Canadian researchers quoted by investment bank Liberum, shows.

As competition intensifies among brewers, more aggressive promotions and new product launches will lead to even higher demand for beer, Euromonitor said. Carlsberg and the Netherlands’ Heineken have been fighting for share in Vietnam, driving beer sales “through the roof,” it noted.

The government is now trying to slow the flow. A special consumption tax aims to increase the tax imposed on beer annually to 65 per cent in 2018. The National Assembly is considering proposals to turn off beer taps during lunch time and late in the evening. It is also weighing up whether to prohibit the sale of alcohol to pregnant women and to ban government employees from drinking during work hours.

CUB originally formed in 1907 as Carlton & United Breweries. The company joined the SABMiller group, the second largest brewer in the world in 2011.

The firm's products include most famous beers such as Victoria Bitter, Carlton Draught, Crown Lager, Melbourne Bitter, Pure Blonde, Cascade, The Yak Ales, as well as ciders including Strongbow, Mercury, and Bulmers.

Together Sabeco and Habeco, both controlled by the state, account for about 60 percent of the domestic market.

Last year, the country’s biggest brewer Sabeco reported a profit of VND4.6 trillion ($205 million), a 33 percent jump from 2015 and 27 percent higher than its target, according to a statement filed at the Ho Chi Minh Stock Exchange.

Saigon Beer Alcohol Beverage, as the company is officially known, just listed its shares on the country’s main bourse in December, eight years after its initial public offering. It reported VND30.66 trillion in revenue last year, up 13 percent from a year ago.

Sabeco and Habeco are two of a few state-owned companies which have performed relatively well, currently remains 89.59 percent owned by the government.

With a share of nearly 41 percent of the domestic beer market, Sabeco is among the most sought-after companies by foreign investors, with suitors including Japan's Kirin Holdings, Thai Beverage and Dutch beverage giant Heineken, according to an official from the trade ministry./.

( VNF )