Mon, Oct 24, 2016 - Page 15 News List

Foreign firms eye Vietnam’s state brewers

AFP, HANOI

Sloshed back at rowdy open-air bia hoi markets day and night, beer is Vietnam’s tipple of choice and now its cash-strapped government is drawing on the nation’s penchant for lager to raise billions of US dollars by selling stakes in state-owned brewers.

The unprecedented divestments in two state crown jewels, the makers of the much-glugged Saigon and Hanoi beers, are expected to net as much as US$2.2 billion.

The sale comes as part of long-promised reforms to privatize bloated state firms, which official figures show contributed about one-third of the country’s GDP last year.

It is hoped the reforms will set the communist country back on track to meet its ambitious economic targets and jump-start growth, which has slowed this year.

For Vietnam’s government, beer is a logical place to start. With a population of 93 million people, the country is one of Asia’s leading swillers of beer.

Vietnamese consumed more than 3 billion liters of the cold stuff last year, according to marketing firm Euromonitor International Ltd. That thirst has piqued interest from foreign brewers, eager to tap growth markets at a time when sales in many developed markets in Asia are forecast to plateau.

“Vietnam has one of the fastest-growing beer consumption markets in the world, and that’s obviously an appeal,” Ho Chi Minh City, Vietnam-based PXP Vietnam Asset Management CEO Kevin Snowball said.

The government said this month the two companies, Hanoi Beer Alcohol and Beverage Joint Stock Corp (HABECO) and Saigon Alcohol Beer and Beverages Corp (SABECO), would be listed in the first three months of next year and would be open to local or foreign bidders.

For the Vietnamese who crowd into the open-air bia hoi markets during lunch, dinner and for some, in between, privatization promises to keep the good times rolling — as long as the buyouts do not mess with flavor.

“I don’t want Hanoi beer to be affected by the taste of Carlsberg, I don’t want Saigon beer to become so similar to a Sapporo... The key is to keep the distinctive taste of the beer,” 48-year-old Duc Thang said, speaking over a glass of cold brew.

Like millions of others across the country, Thang comes to the bia hoi to unwind.

“At a bia hoi you can talk about so many things — you can chit-chat, talk business, family problems. It’s easier to talk when you have one or two beers,” Thang said.

Some major names already have a foothold here — Heineken NV has about 17 percent of the market, competing with other players such as Carlsberg Group and Sapporo Breweries Ltd — and reports say Thailand’s Thai Beverage and Boon Rawd Brewery’s Singha might now be ready enter the fray, too.

However, the sales could instantly transform a foreign buyer into a top brewer: SABECO enjoys about 45 percent market share, while HABECO has 17 percent, Euromonitor said.

The government said it would sell its 90 percent stake of SABECO for US$1.8 billion, and its 82 percent stake in HABECO for US$400 million.

Both companies declined to speak to reporters.

Economists said the government is selling the stakes because it is thirsty for cash.

Public debt hit 62 percent of GDP this year according to official figures, and is climbing closer to the government-sanctioned debt ceiling of 65 percent of GDP.

“It’s the right time for the government to consider selling a number of state-owned companies to get more for the budget,” economist Pham Chi Lan told reporters.

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