Thirsty Vietnam proves a money-spinner for Heineken

By CNBC   June 9, 2016 | 03:12 pm GMT+7
The world’s third largest brewer Heineken considers Vietnam a vital growth engine in Asia Pacific as the Dutch beer manufacturer struggles to increase profitability from its businesses in Africa, the Middle East and Europe.

Heineken is pouring money into Vietnam, the firm's second most lucrative beer market behind only Mexico, according to the company's Asia Pacific President Frans Eusman.

The 143-year-old brewer operates under two companies in Vietnam: APB (Asia Pacific Breweries) in Hanoi, which is wholly owned by Heineken, and VBL (Vietnam Brewery Limited Company), in which Heineken has a 60 percent stake.

"We're very proud of what we've been able to create," Eusman recently told CNBC’s Squawk Box. “Five years ago, Heineken entered with a very small brewery when Vietnam started to open up. Now we are the number two in Vietnam.”

thirsty-vietnam-proves-a-money-spinner-for-heineken

Vietnam is a flagship market for Heineken due its high beer consumption. Photo by Andy Bryant, Creative Commons 2.0

He said Heineken saw opportunities for its growth across Asia. The Dutch beverage giant spent $60 million building a brewery in Myanmar in 2015 and also operates in China, India, Cambodia, Indonesia and Malaysia, holding the biggest market share in half of them.

The third largest brewer in the world (after Anheuser-Busch InBev and SABMiller, based on volume) recently signed a cooperation agreement with Filipino beer manufacturer Asia Brewery to push the Heineken and Tiger brands into the Philippines, and Eusman revealed that further deals will be made public soon.

Eusman mentioned that Myanmar is also a "fantastic opportunity". The head of Heineken’s Asia Pacific market added: “Myanmar, in a way, resembles Vietnam maybe 10 to 25 years ago. It has a huge young population, growing wealth, growing GDP, and more of those people have expendable income.”

The president said that Tiger is Heineken’s best brand in the Southeast Asian market and the Singaporean-born beer is a “fantastic brand” with the potential to become globally popular.

"It's an exciting brand, and is driving a lot of our growth at the moment," Eusman told CNBC. "Tiger is in the top 10 of our biggest global brands, and it is hardly available outside Asia at the moment. So what we're doing is building momentum and continuing it in Asia, and at the same time eyeing opportunities outside Asia."

Regardless of the declining Asian economy, Heineken is still optimistic in the growth fundamentals of this region with its young and strongly developing population. “If you look at beer markets and consumption per capita in the region, it is still relatively low compared to Europe, so there is a lot of potential,” Eusman concluded.

 
 
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