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Bar and pub owners in Ho Chi Minh City say breweries are promising them anything from customized coasters to branded patio umbrellas, but for the owners a cash payment seems like the more attractive option.
Breweries are willing to pay big bucks up to tens of thousands of dollars per year to have their beverages taking prime position in the city's bars.
Hoa, a pub owner in Tan Binh District, admitted that in fact most companies offer some sort of incentives to build a relationship with local pubs, but foreign-invested breweries have more to give.
“They take really good care of us by providing customized ads or by sending groups of attractive promotion girls to our pubs,” he said.
Hoa said that this has been going on for quite a while, and the first thing the breweries do is to take time to see how well a local pub performs. How much beer the pub sells will dictate how much financial support it will get.
Big breweries like Dutch giant Heineken and Japan's Sapporo have cash to do it on another level.
Heineken pays a pub between VND300 million ($13,000) and VND500 million ($22,000) per year, said Hoa, while Sapporo can double the cash payment to VND1 billion for pubs and bars that are committed to selling 24,000 cans of beer per month.
“As a famous pub in town, my place is a quite busy. So it’s not difficult at all to reach the sales volume,” Hoa said in a confident voice, adding that he has spent tens of billions of dongs (VND1 billion is equivalent to $45,000) to make his pub bold and unique. Vietnam's annual average income was around $2,100 last year, according to the World Bank.
“We are different, that’s why big breweries have spent their money on us,” Hoa continued.
A pub owner in District 11 said although his pub is small, Heineken has paid him tens of thousands of dollars in cash in exchange for exclusive marketing space.
Sapporo has also struck a one-year deal worth half a billion dong with the owner on the condition that at least 14,400 cans must be sold per month.
The Japanese beer maker also pledged to raise the payment in line with rising sales.
The practice has become so widespread that incentives and kickbacks are now commonly expected, said the owner of a pub in the town center’s District 2.
All breweries are looking for an exclusive marketing space in busy downtown pubs and bars, according to the owner, who said when it comes to relationships with breweries, the tastes of his customers are the deciding factor.
“We are talking about really big bucks in sponsorship deals,” he said, referring to things like fridges, glasses, umbrellas, furniture and customized signage.
Local breweries are trying to catch up with the game, he continued.
Ho Chi Minh City-based brewery Sabeco is the dominant player in Vietnam with 46 percent of the local beer market. However, being 82 percent state-owned, Sabeco simply doesn’t have the budget to compete with foreign players.
Sabeco is paying a 10 to 15 percent bonus on monthly revenues, the pub owner in District 2 said. For example, if a pub generates $22,000 from selling Sabeco beer per month, it will get $2,000 in commission in return.
A senior executive from Sabeco told VnExpress that the firm has signed deals with about 2,000 pubs and bars throughout Vietnam. The executive didn’t confirm how much money the company has spent, but said it’s a lot.
Heineken has identified Vietnam as the next key driver for its growth in the Asia Pacific region, and it is pouring money into the country, which is second only to Mexico in profitability, said the company’s Asia Pacific President Frans Eusman.
Vietnam Brewery Limited, 60 percent owned by Heineken, is now the second largest brewery in the Southeast Asian country with a 25 percent market share.
"Of the total alcohol consumed in Vietnam, 94 percent is beer, so it is really part of the Vietnamese culture," said Leo Evers, managing director of VBL.
"Walk into any restaurant or bar and you'll notice that everyone is drinking beer," Evers says in an interview with CNBC.
The Vietnam Beer Alcohol Beverage Association has forecast rapid growth at which the country will raise annual beer output by 25 percent to 4 billion liters by 2020.
Over the past five years, Vietnam has doubled its beer consumption to more than 3 billion liters per year. Each Vietnamese person drinks on average 27.4 liters, making them the heaviest beer drinkers in Southeast Asia, the third in Asia after Japan and China, and in the world’s top 25 heaviest beer drinkers.
Last year, Vietnam produced an estimated 3.4 billion liters of beer and 300 million liters of liquor.
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