Workers pack cans of beer at Dai Viet Beer Factory in Thai Binh province. — VNA/VNS Photo Tran Viet

HA NOI (Biz Hub) — Breweries are running at full throttle as the Vietnamese thirst continues to expand. Both domestic and foreign companies realise the potential for sales in a nation that has gained a reputation for beer drinking. All are raising production to handle the thirst.

Hirofumi Kishi, general director of Sapporo Viet Nam, told Tuoi Tre newspaper his company had approved a plan to raise production from 40 million to 100 million litres a year.

The company will install more equipment to raise capacity and develop distribution strategy. It is focusing on HCM City and other southern provinces before expanding to Ha Noi.

Sapporo started doing business in the country in 2010 when it set up a joint venture with the Viet Nam National Tobacco Corporation. In 2011, it began operations in southern Long An Province, focusing on sales in HCM City.

The Saigon Beer-Alcohol-Beverage JSC, commonly known as Sabeco, recently started work on the Sai Gon-Kien Giang brewery project in the Mekong Delta province of Kien Giang.

The US$28.4 million plant, expected to produce 50 million litres of beer annually, follows the groundbreaking ceremony for a similar project in Can Tho.

In HCM City, where Sabeco is headquartered, the company also plans to increase the capacity of the Sai Gon-Cu Chi Beer Factory. Upgrading will enable its 24 Vietnamese breweries to produce more than two billion litres of beer a year against the present 1.8 billion litres. This will make the company the leading beer supplier in Viet Nam.

With the new expansion, Sabeco is expected to reach its milestone to produce two million litres of beer a year, given its current capacity of 1.8 million litres.

Heineken is now produced by Viet Nam Brewery Limited (VBL), a joint venture between Viet Nam Satra and Singapore-based Asia Pacific

Breweries Ltd (APBL). The company wants to raise production capacity to 420 million litres a year from the present 150 million litres.

Dutch beer was the first major foreign beer brand to enter the country and it still dominates sales of foreign brands.

An 86 million euro (US$117 million) beer factory built by Slovakian BTG Holdings and capable of producing 190 million litres annually will make its debut next year.

Meanwhile, the American Anheuser-Busch InBev, the world's largest brewer, is expected to start brewing here by the end of the year with a factory capable of producing 100 million litres of beer annually.

The market survey company Eurowatch reported that each Vietnamese adult consumed an average of 32 litres, making Viet Nam the third-largest per capita consumer in Asia, just behind China and Japan, and Southeast Asia's biggest beer drinking country.

A recent report by the Viet Nam Beer, Alcohol and Beverage Association said the country consumed more than 3 billion litres of beer last year.

Nguyen Van Viet, chairman of Viet Nam Beer and Beverage Association (VBA) said beer consumption in Viet Nam this year was expected to increase by 7 per cent above the 3 billion litres consumed last year.

Beer makers were in fierce competition to keep market share because of difficulties in the economy, Viet said, adding that they would consider themselves lucky if they copntinued to grow by about 7 per cent.

Pham Thi Hong Hanh, general director of Sabeco, said the pressure from foreign brands was truly challenging.

Athough foreign beer makers had smaller market shares, their products had much higher commercial values.

Sabeco is up against foreign brands such as Heineken, Sapporo, Tiger and Budweiser which have higher trade value. The capacity of foreign production may be lower than Sabeco's, but their revenues are sometimes higher.

In 2012, Sabeco spent VND500 billion ($22.7 million) on marketing activities. In 2013, this reached about VND1 trillion ($45 million).

However, experts said it is still lagging behind amounts spent by other foreign beer makers. — VNS