Masan struggles to grow in Vietnam’s competitive beer market

Masan expects a loss of $15 million this year from its White Lion beer brand, Danny Le, board member of Masan Consumer Holdings, said at an investors’ meeting last month.

If the company cannot create a new and competitive product, it will have to withdraw from the market, he added.

"The beer business costs a lot of advertising money, and we do not want to spend tens of millions of dollars a year for a brand that cannot be in the top 3," he said.

Masan’s beer brand, White Lion, launched five years ago, is becoming less significant in the group’s financial reports as longer-established players retain a firm hold in the market.

When it was first launched, a crate of White Lion cost VND40,000 ($1.7) less than the cheapest domestic brand at the time, resulting in large sales in the southern region.

Orders were so high that Masan’s beer factory, which it acquired from another beer producer in 2014, was operating at maximum capacity of at 50 million liters a year in the first year, but still failing to keep up with demand.

The company then built a second plant with four times the capacity in the southern province of Hau Giang.

Helped by regular promotions featuring celebrities and gifts, sales reached VND1 trillion ($43 million) after two years, and industry observers at the time considered White Lion a threat to major brewers such Sabeco and Heineken.

"Consumers welcoming the product is the foundation for Masan Consumer Holdings to expand its market nationwide and to enter the high-end beer segment," the company said in a report in 2017.

But the company’s expansion strategy has hurt sales badly.

In order to reduce inventory to launch new products, Masan increased the commission for distributors, making its 2017 H1 beer revenue falling 15 times year-on-year.

Although company targeted a revenue of VND1-1.2 trillion ($43-51.6 million) in 2018 with new products, its leaders admitted that expanding the business could take 12-18 months as they had to restructure a distribution system and employ experienced salespeople.

At the end of last year, White Lion revenue was VND388 billion ($16.7 million), just 39 percent of its annual target.

The company had planned to employ about 150-200 salespeople this year to focus on marketing in street eateries, targeting double last year’s revenues. But by September, its revenue had fallen 7 percent year-on-year.

Meanwhile, top brewer Sabeco’s nine-month revenues rose 10 percent year-on-year to VND28.3 trillion ($1.22 billion), while that of the Hanoi Beer Company (Habeco) also posted a 10 percent increase to VND2.7 trillion ($114.89 million).

Vietnam consumed 4.1 billion liters of beer in 2017, making it the biggest alcohol market in Southeast Asia and the third biggest in Asia after Japan and China, according to the Ministry of Health.