Swelling disposable incomes, a discernible shift in taste and a company shake-up has left Vietnam's leading wine producer licking its lips in anticipation of an expected sales boom.
Since it first began specializing in making wine in 1993, the Hanoi-based Thang Long Co has seen its profits rise from around US$200,000 to a respectable US$1.3 million last year from revenue of US$4.25 million.
Ngan Pham-bang, the company's general director, expects profit margins to rise exponentially after its equitization or semi-privatization which began in 2000 but was only completed mid-way through last year.
It is just one of 861 companies from the more than 5,600 state-owned enterprises that have sold off stock in themselves in a bid to raise capital and improve efficiency since the equitization process kicked off in 1995.
In Thang Long's case, the government has retained a 40 percent stake, domestic investors have snapped up 20 percent, while its 300 staff and management hold the balance.
"This has had a big effect on the company now that everyone owes some capital because staff are more proactive," Ngan said. "Even I have to work harder and continually strive to improve the company's performance or else someone will replace me. I have to ensure that shareholder value grows."
Surprisingly, he says sales growth for the most bourgeois of tipples lies with Vietnam's lower-middle classes, despite GDP per capita in the communist-ruled country hovering at US$430.
"The upper-middle classes aspire to drink imported wine, but more and more people in the countryside and among the urban lower-middle classes are changing from drinking rice wine at weddings and other celebrations to fruit-based wine."
Ngan attributes the phenomenon to the ripple effects of Vietnam's gradual transition to a socialist-leaning market economy, which has boosted personal wealth levels in the major cities.
The wine's sweet, but highly palatable taste, and the fact that at less than one dollar a bottle, it costs almost the same as the best quality rice wine, are encouraging people to make the switch, he said.
However, unlike its French, Australian, Chilean or even Japanese elder cousins, the majority of Vietnamese wine is not made from grapes, though it is not for lack of trying. Strawberries, pineapples, apricots and a local speciality, tao meo or wild apples grown in isolated, mountainous northern areas, are the usual ingredients.
"The truth is, we really want to produce grape wine but Vietnam does not have the expertise nor grapes of sufficient quality to make it," Ngan said.
Less than three percent of the five million litres produced by the company last year was made from grapes grown in Ninh Thuan province, but even he admitted it was of poor quality.
"We also tried importing grapes from other countries, but because we are not suitably skilled and our equipment is not advanced enough the project was not a success."
In a bid to keep its neck out in front of the 20 or so other state-run producers, Thang Long has been buying vats of wine from overseas during the past year and bottling it for sale in the domestic market.
Ngan said he was in contact with Western producers for help in expanding production of grape-based wine, but added that no one has yet agreed to invest the time and money needed to take the company to the next stage level.
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