VIETNAM BEVERAGE INDUSTRY RESEARCH REPORT Q3/2019€¦ · Global Market 21 2.1 Beer 22 2.2 Spirit 33 2.3 Soft Drink 43 3 Vietnam Market 45 3.1 Beer 47 3.2 Spirit 58. Abbreviation

VIETNAM BEVERAGE INDUSTRY RESEARCH REPORT Q3/2019

1

ân

CONTENT

3.3 Soft Drink 72

3.4 Risk Analysis 86

3.4.1 SWOT Analysis 86

3.4.2 Five-forces Analysis 87

3.4.3 Business Risk 90

3.5 Industrial Development Planning 94

3.6 Outlook and Forecast 95

4 Enterprise analysis 104

4.1 Profitability 106

4.2 Operability 111

4.3 Financial Strength 114

4.4 Profit Margin 116

5 Financial Statement Appendix 117

2

Abbreaviation 3

Executive Summary 4

1 Business environment 7

1.1 Macroeconomic context 8

1.2 Legal Framework 11

1.3 Trade Agreements 16

2. Global Market 21

2.1 Beer 22

2.2 Spirit 33

2.3 Soft Drink 43

3 Vietnam Market 45

3.1 Beer 47

3.2 Spirit 58

Abbreviation

3

VMF Vietnam Ministry of Finance

CAGR Compouded Annual Growth Rate

FI Foreign Investment

EVFTA Europe-Vietnam Free Trade Agreement

FAO Food and Agriculture Organization

FDI Foreign Direct Investment

FTA Free Trade Agreements

VA Value Added

IWSR International Wine & Spirit Research

MFN Most favoured nation

OIV International Organisation of Vine and Wine

GDVC General Department of Vietnam Customs

GSO General Statistics Office of Vietnam

TTĐB Special Consumption Tax

CPTPPComprehensive and Progressive for Trans-Pacific

Partnership Agreement

UNFPA United Nations Population Fund

UNWTO World Tourism Organization

USDA The United States Department of Agriculture

VAT Value Added Tax

VBA Vietnam Beverage Association

VIRAC VIRAC Joint Stock Company

WTO World Trade Organization

Executive Summary

4

WORLD

❖ Beer:

• In 2017, global beer production is estimated to decrease by xxx% to

xxx million liters.

• Beer trade is also experiencing a downward trend since 2015, the

export volume of beer only reached xxx billion liters, down xxx%

compared to 2016, but due to the increase in beer prices, the export

value increased slightly by xxx% to xxx billion USD.

• In particular, Mexico still holds the leading position, providing the

global beer, currently Mexico provides xxx% of global beer exports.

• In terms of brands, the four largest brewers account for nearly xxx%

of global beer sales.

❖ Spirit:

• Wine: In 2018, global wine production reached 292 hectares (1 hectoliter

equivalent to 100 liters), the highest level since 2000; Italy is the largest

wine producer in the world, accounting for xxx% of global

production. Regarding consumption,

Regarding exports, in 2018, exports reached xxx billion liters, worth

EUR xxx billion.

• Strong spirit:

❖ Soft drink:

• In 2017, the amount of beverage consumed through global off-trade

channel reached xx billion liters. Estimated beverage revenue in 2017

reached more than xxx billion USD.

5

VIETNAM

❖ Beer

• Inventories in the first 6 months were about xxx billion liters, an

increase of xxx% compared to the end of 2018; in which, bottled

beer and canned beer inventories are respectively xxx% and xxx%;

• In terms of exports, the imported beer output reached xxx million

liters worth xxx million USD (an increase of xxx% over the same

period), the three main sources of beer supply in Vietnam are the

Netherlands (xxx%), Mexico (xxx% ) and Belgium (xxx%).

• Regarding imports, the export beer output increased over the

previous year to xxx million liters worth xxx million USD.

❖ Spirit:

• Spirits: Production of spirits reaches xxx million liters (up xxx%);

consumption reached xxx million liters (an increase of xxx%);

Inventory xxx million liters.

• Vietnam exported more than xxx million liters of wine

worth xxx million USD (an increase of more than xxx% over the

same period).

• Wine: Production of wine reaches xxx million liters (up xxx%);

consumption reached xxx million liters (up xxx%), inventory xxx

million liters. Regarding imports, the output reaches xxx million

liters and is worth xxx million USD,

❖ Soft drink: n the first 6 months of 2019, beverage production in

Vietnam reached xxx billion liters (an increase of xxx% compared to

H1/2018), consumption reached xxx billion liters (an increase of

xxx% compared to H1/2018) worth xxx trillion VND (up by xxx%

over the same period last year. Regarding categories,

Executive Summary

6

• Regarding trade, total beverage exports reached xxx million liters

(down xxx% over the same period, imports reached 292.7 million

liters (up xxx% over the same period) reaching xxx million liters and

worth xxx million USD, Vietnam's fresh water export volume will

reach xxx million tons, worth xx million USD, an increase of about

xxx% over the same period. The first month of 2019 is estimated at

xxx million liters and valued at xxx million USD (up xxx% over the

same period).The import of Vietnam's fresh water in the first 6

months of 2019 reached xxx million liters and worth xxx million.

Enterprises:

• Beer:

Executive Summary

Nội dung

2. Tổng quan ngành

2.1 Thị trường thế giới

2.2 Thị trường Việt Nam

2.3 Rủi ro ngành

2.4 Quy hoạch phát triển ngành

2.5 Triển vọng và dự báo

7

1. BUSINESS ENVIRONMENT

8

❖ The gross domestic product (GDP) in the second quarter of 2019 is

estimated to increase by xxx% over the same period last year,

although lower than the growth of the second quarter of 2018 but

higher than the second quarter growth of 2016 and 2017.

❖ The young population structure creates a potential market for the

beverage industry.

Total population and working-age population structure in 2013–2018

% Quaterly GDP Growth rate, 2016-2019

Million people

Source: VIRAC, GSO

Source: VIRAC, GSO

1. Business Environment

1.1. Macroeconomic context

9

Monthly CPI, 1/2015-6/2019

❖ The consumer price index (CPI) in the first 6 months of 2019 has many fluctuations but still moves relatively close to the beginning of the year and is

in the scenario of low CPI growth. On average, in the first 6 months of 2019, CPI increased by xxx% over the same period in 2018. This is the lowest

6-month average increase in the past 3 years.

❖ According to the Nielsen Consumer Confidence index, Vietnam's consumer confidence index in the fourth quarter of 2018 stood at xxx percentage

points - down xxx points from the previous quarter.

Consumer Confidence Index, Q1/2014-Q4/2018

Source: VIRAC, Nielsen Source: VIRAC, GSO



10

Total usable income, 2010–2020fIncreasing trend in usable income is a positive factor to promote

spending for the domestic beverage industry.

In particular, the retail sales of goods in the first 6 months of 2019 is

estimated at xxx trillion, accounting for xxx% of the total and increasing

xxx% over the same period last year.

Total retail sales of consumer goods and services growth rate,

2011 – H1/2019 (excluding price factor)

Source: VIRAC, Economist Intelligence Unit

Billion USD

Trillion VND

Source: VIRAC, GSO



• National technical regulation for alcoholic beverages (QCVN 6-3:2010/BYT

• National technical regulation on non-alcoholic beverages (QCVN 6-2: 2010/BYT)

• National technical regulation on natural mineral water and bottled drinking water (QCVN 6-1: 2010/BYT)

• Law on Product Quality Goods No. 05/2007/QH12 dated 21/11/2007;

• Decree No. 38/2012/ND-CP of the Government dated April 25, 2012

• Circular No. 29/2012/TT-BCT of the Ministry of Industry and Trade

• Law No. 55/2014/QH13 – Environmental Protection Law

• Circular No. 128/2013/TT-BTC dated 10/9/2013 of Ministry of Finance

• Circular 164/2013/TT-BTC dated November 15, 2013 of the Ministry of Finance

• Decree No. 08/2015/ND-CP dated January 21, 2015 of the Government

• Law No. 27/2008/QH12 – Special Consumption Tax Law

• Decision No. 2219/QĐ-BCT

Laws, decrees, and industry regulations

11


1.2. Legal Framework

12

• Decision No. 244/QĐ–TTg dated 12/2/2014 of Government

• Decree No. 94/2012/NĐ-CP of Government.

Impact of Legal Framework on Beverage Industry

For State Agencies

For Enterprises in Beverage Industry

Positive Impact:



Sources: VIRAC, GSOSources: VIRAC, GSOSources: VIRAC, GSO

%

13

Negative Impact:

Enterprises producing Beer 2011–2016 Before-tax profit ratio of Beverage Industry

2010–2016

Production Growth rate of Beverage Industry

2011–2017



14

New circular, decree on special consumption tax (SCT) with alcoholic beverages.

Special Consumption Tax for Alcoholic Beverages is following the roadmap of

increasing Law 70/2014/QH13 and will increase gradually to xxx% in 3 years,

starting from 1/1/2016.

Decree 108/2015/NĐ-CP and Circular 195/2015/TT-BTC

New scheme on SCT on soft drink

Source: VIRAC

Commodity TimeTax

rate(%)

Roadmap for SCT applied to Spirit and Beer from 2016



15

New regulation on alcoholic import

Decree No. 105/2017/NĐ-CP dated 14/9/2017

New points about spirit import:

Abolish regulations on submission of traders’ vouchers

New regulations on alcohol import to implement certification procedures



• Tariff:

3.1. WTO — Vietnam became the 150th member of WTO on 7/11/2006

Accession commitment:

• Distribution markets:

• Investment Environment:

Impact of WTO on Vietnam beverage market:

Commodity

MFN tariff

(%)

Commitment with WTO

Pre-accession(%)

Final

Bound

(%)

Implemen

-ting time

Source: VIRAC, WTO

16


1.3. Trade Agreements

• Tariff:

3.2. EVFTA — Europe-Vietnam Free Trade Agreement signed on 02/12/2015 in Brussels.

Accession Commitment:

Commodity Commiment

Source: synthesized by VIRAC

17

• Investment:



Impact of EVFTA on Vietnam beverage market:

3.3. CPTPP — Comprehensive and Progressive for Trans-Pacific Partnership Agreement

Commitments

• Tariff (trading goods):

• Other commitments:

18



Impact of CPTPP on Vietnam Beverage market

No. IndustryTariff cutting

roadmap

Vietnam import tariff commitment with CPTPP:

Source: VIRAC, Ministry of Finance

22



3.4. Other trade agreements:

Impact of FTAs on Vietnam beverage market:

20



Nội dung




2.3 Rủi ro ngành



21

2. GLOBAL MARKET

2. Global Market

2.1. Beer

22

Barley price movements in the UK 1/2012-6/2019

Input materials: Malt, Hops

Malt

Global Barley Production and Consumption, 10/11–18/19e

Billion ton

Source: Synthesized VIRAC Source: Synthesized VIRAC

Unit: GBP/ton

23

Market Share of the 5 largest barley producing countries

2018/2019e

In the world, countries in Europe and Russia are the two places that

produce the most barley due to its mild climate.

Barley exported for processing Malt accounts for about xxx% of the

total barley export worldwide.

According to USDA, more than xxx% of the world’s barley production is for animal farming, xxx% for produce Beer, Spirit, xxx% for food industry and

other purposes..

In the period 12/13 to 16/17, the average annual growth of barley production was xxx%.

Global barley consumption for processing malt, 10/11–18/19

Million ton

Source : VIRAC, International Grains CouncilSource: VIRAC, USDA

2. Global Market

2.1. Beer

24

In the world, price of malt is determined by 4 main factors:

Export volume of malt in the world increased slightly, especially in Europe,

forecasting European export tends to increase due to favorable weather in

some countries in the region: England and Spain.

Source : VIRAC, United Nations Trade Statistics, Trademap

Global production and turnover of exporting malt

2011 - 2018

2. Global Market

2.1. Beer

Hops

25

Sources: VIRAC, E-Malt.com, International Hop Growers’ Convention, Sources: VIRAC, U.S.D.A National Agricultural Statistics Service

$/lb (lb = pound = 0.45kg)

In 2018, hops production is estimated to decrease by xxx% due to unfavorable natural

conditions: heavy rain, storms, melting ice, and global temperatures remain high. Due to the

influence of supply, hops prices fell slightly to xxx USD/lb at the end of 2018 after recording

the highest ever price to xxx USD/lb. The Hops supply crisis occurred globally due to the sharp

decrease in the area of hops cultivation

Sources: VIRAC, E-Malt.com, International Hop Growers’ Convention,

Global cultivated area and production of Hops 2008–2018e Hops Price in Washington, D.C. 1982–2018

Market share of 5 largest hops producing countries

2018

2. Global Market

2.1. Beer

26

The output and export value of Hoa Bia varies continuously but always

reach a high value.

Some typical countries of Europe are Germany, Czech Republic, England,

Belgium and USA, which have advantages in producing Hops, so are also

the 5 biggest exporters in the world.

Sources: VIRAC, United Nations Trade Statistics


Market share of 5 largest hops exporting countries 2018e

Hops export quantity in 2011–2018e

2. Global Market

2.1. Beer

Demand-Supply of global beer marke

Global production is large-scale with the largest development motivation coming from Asia and Europe. Fluctuating fluctuations due to prolonged

drought reduces the output of malt - the main source of raw materials - but still meets the demand in the world. The future growth rate will be

determined by the development of Africa and the Middle East.

In 2017, global beer production was estimated to decrease by xxx% to xxx% billion litre. Beer production in alost areas went down as Asia decreased by

xxx% but it still held xxx% global market share. European beer production decreased by xxx% and Middle East considerably drop by xxx%

Sources: VIRAC synthesized

27

RegionProduction

(billion litre)

Growth rate 2016–

2017

(%)

Market

Share

(%)

Billion Litre


Quantity and growth rate of beer production in 7 regions 2017e Global beer production and consumption, 2010–2017e

2. Global Market

2.1. Beer

28

Beer continues to be a popular item around the world, but the pace of

import and export has decreased compared to previous years.

In 2016, beer exports plummeted both in volume and value, respectively

xxx% and xxx% compared to 2015. In 2017, the downward trend of export

continued when beer output reached only xxx billion. liter decreased by

xxx% compared to 2016, however, due to the increase in beer prices, the

export value increased slightly by xxx% to xxx billion USD.

Exporting countiries Value (million USD) Importing countries Value (million USD)

Sources: VIRAC, United Nation Trade statistics

Global quantity and turnover of beer export, 2010–2017


Top largest export and import value countries in 2018

2. Global Market

2.1. Beer

Europe is currently one of the regions contributing the most to beer import and export due to its tradition and experience in producing, as well as

possessing a large source of raw materials such as barley and hops, followed by America, Asia and Australia.

The beer market has a clear differentiation in two groups: Multinational enterprises have the advantage of capital, brands, distribution channel and

indigenous producers understand and serve the needs of local customers, direction.

The four largest brewers have occupiedd xxx% total global beer.

29

Market share of top largest beer brand, 2018

Sources: Barth-Haas Group Report

2. Global Market

2.1. Beer

30

Sources: brandirectory.com

Bud Light, Heineken and Budweiser were ranked as the world's most valuable brands by brandirectory.com for 2 consecutive years (2018–2019f).

These are also three long-standing beer lines and still maintain high sales and increase steadily every year in the context of global economic

downturn.

1. Budweiser

RankLogo Brand Enterprise Nation

Brand value (million USD) Brand Rank

2018 2017 2018 2017 2018 2017

10 largest beer brand value 2018-2019f

2. Global Market

2.1. Beer

31

2. Bud Light

3. Heineken

4. Harbin

5. Kirin

6. Corona Extra

2. Global Market

2.1. Beer

32

7. Snow

8. Brahma

9. Skol

10. Guinness

2. Global Market

2.1. Beer

33

After a long period of sharp decline, the area of grape cultivation decreased

sharply in 2018.

Sources: VIRAC, OIV Sources: VIRAC, OIV

Sources: VIRAC, OIV

Wine

Input materials: Grapes

Grape growing area produces wine, 2005–2018e

Unit: thousand ha

Countries 2016 (thousand

ha)

2017 (thousand

ha)

Diference 2017/18

(%)Countries 2017 (thousand ha) 2018 (thousand ha) Difference 2017/18

(%)

Top 5 countries with the largest vineyard area in EU, 2018 Top 5 countries with the largest vineyard area out of EU

2. Global Market

2.2. Spirit

34

Countries Production quantity

In 2018, grape production is estimated at xxx million tons, the highest output in the past 8 years, an increase of xxx% compared to 2017, concentrated

mainly in Europe with xxx%, followed by Chau. Asia with xxx%, America xxx%.

Sources: VIRAC, OIV

General grape production in 2010 – 2018

Million ton

Sources: VIRAC, OIV

Total grapes production by country in 2018

2. Global Market

2.2. Spirit

35

Sources: VIRAC, OIV

Hudred million litre

Sources: VIRAC, OIV

Sources: VIRAC, OIV

Global wine production and consumption, 2005–2018e

Top 5 largest wine producing countries, 2017–2018

Wine production has many significant changes while consumption

demand was kept stable in the period 2005-2018.

Market share of 5 largest wine producing countries 2018e

Italy, France and Spain wine production also increased significantly compared

to 2017, corresponding to xxx billion liters, xxx billion liters and xxx billion

liters. The highest growth rate is Spain with more than xxx% of Wine

production compared to 2017.

Country2017

(billion litre)

2018

(billion litre)

Difference

2017/18

2. Global Market

2.2. Spirit

36

Sources: VIRAC, OIV

Sources: VIRAC, OIV

Market share of 5 largest wine consuming countries, 2018 Top largest wine consuming countries, 2017- 2018

Coutry 2017 (billion litre)2018 (billion

litre)Difference 2017/18

2. Global Market

2.2. Spirit

Wine exports are in an upward trend in both value and output with major European exporters.

In 2018, export reaches xxx billion liter, worth xxx billion EUR. Spain, France, Italy, and Chile ranked first in terms of output and export value due to

favorable weather for cultivating specific grape varieties and a long tradition of wine production.

37

Sources: VIRAC. OIV, GTASources: VIRAC, OIV

Country

Export Quantity

(billion litre)

Export Value

(billion EUR)

2017 2018 2017 2018

Top largest wine exporting countries, 2017 - 2018Wine export quantity and value 2000–2018e

2. Global Market

2.2. Spirit

38

Sources: VIRAC. OIV, GTA

Countries

Import Quantity

(billion litre)

Import Value

(billion EUR)

2017 2018 2017 2018

Top largest wine importing countries, 2017 - 2018The 5 largest wine importers in the world, accounting for more than xxx% of

the total global wine production with xxx billion liters worth xxx billion Euro.

2. Global Market

2.2. Spirit

Strong spirit

• Brandy:

• Whiskey:

• Vodka

39

2. Global Market

2.2. Spirit

• Rhum:

• Tequila

40

Sources: VIRAC, UNcomtradeSources: VIRAC, Uncomtrade, Trademap

%

Strong spirit consumption, 2017-2023f Top largest strong spirit importing countries2018

Demand for Spirits is increasing in the world with export value also increasing slightly.

In 2018, the consumption of strong spirit was estimated at xxx billion litres, an increase of xxx billion litres compared to 2017

Billion litre

2. Global Market

2.2. Spirit

41

Rank Change TypeTotal

point

Total

brand

point

Number of

brands in

the top 10

The most popular wines in the world 2016

Source: VIRAC, drinkspowerbrands.com

Rank Type Brand point Change

The most famous wine brands in the world 2016

Source : VIRAC, drinkspowerbrands.com

2. Global Market

2.2. Spirit

Soft Drink (non alcohol beverage)

The Beverage market is still in a strong growth period, with an estimated

average growth rate of beverage consumption reaching xxx%. In 2017,

the global consumption of soft drinks reached xxx billion liters.

Estimated beverage revenue in 2017 reached more than xxx billion USD.

Beverage export value has decreased steadily over the years, the output

has changed slightly in the period of 2010 - 2015, but increased sharply

in 2016-2017.

42

2. Global Market

2.3. Soft drink

Giá trị và sản lượng xuất khẩu nước giải khát giai đoạn 2010-2017e

Sources: VIRAC, Uncomtrade

Sources: VIRAC, Euromonitor

Million USDThousand ton

Billion litre

Global soft drink consumption through off-trade channel, 2012 - 2017

43

Sources: brandfinance


Bottled water is the most consumed in the world, accounting for xxx% of

global beverage consumption in 2017.

Top 10 valuable Soft Drink Brand2017–2018

RankLogo Brand Enterprise

Brand Value (million USD)Change

17/18 (%)Brand rank

2017 2018 2017 2018

Beverage consumption structure by volume, 2017

2. Global Market

2.3. Soft drink

44

Soda Energy drink Juice Bottled water

Sources: VIRAC, Bloomberg Intelligent, VBA

Coca-Cola and Pepsico still maintain their top position in the Beverage industry, contributing xxx% of the largest value brand globally. With the brand

value estimated to be xxx billion USD, although reducing by xxx% compared to 2017, Coca-Cola is still the most expensive brand globally, leading

Pepsico xxx billion USD.

In 2016, Coca-Cola and Pepsico took the largest market share in carbonated soft drinks, followed by energy drinks.

2. Global Market

2.3. Soft drink

Nội dung




2.3 Rủi ro ngành



45

3. VIETNAM MARKET

Beverage production and consumption in the first 6 months of 2018 increased by xxx% compared to the same period last year. In particular, production

reached xxx billion liters, consumption reached xxx billion liters. However, industry revenue increased by xxx% over the same period.

46

3. Vietnam Market

Domestic beverage import-export, 2010-H1/2019

Sources: VIRAC, UN Comtrade

Domestic beverage production and consumption, 2010-H1/2019

Sources: VIRAC, GSO

The Beverage industry has a large scale, high growth rate, high growth potential. Production is gradually meeting demand and increasing exports,

contributing to reducing trade deficit.

Billion litre Billion VND Billion litre

Source: VIRAC synthesized

Agriculture – Malt

Making beer:

Packing:

Agent – Customer:

47

3. Vietnam Market

3.1. Beer – Value chain

2011 2012 2013 2014 2015 2016 2017e


48

Sources: VIRAC, United Nations Trade StatisticsSources: VIRAC, United Nations Trade Statistics

The supply of malt for domestic

brewers is mainly imported from

Australia, accounting for xxx% of the

total volume of malt exported to

Vietnam.

Input materials of Beer industry depend on imports, mainly malt

Malt and Hops Imports 2010-2017

Vietnam malt import quantity, 2011-2017 The main malt export areas for Vietnam, 2017e

3. Vietnam Market

3.1. Beer – Input Material

49


In 2017, imports of Hops from Germany accounted for more than xxx%, followed by Slovenia with nearly xxx% followed by Czech with xxx%. In

addition, Hoa Bia is also imported in small quantities from the US and some other countries due to its low price and relatively stable supply.

Thousand kg


Vietnam Hops Import, 2010 -2017e The structure of hops supply for Vietnam 2017Hops only need a small amount in

production and decide on the

bitterness, taste, and foam quality

of Beer.

3. Vietnam Market

3.1. Beer – Input Material

50

Vietnam has always been one of the largest beer markets in the world. Specifically, in the first 6 months of 2019, total beer production reached xxx billion

liters (up xxx% compared to the same period in 2018); consumption reached xxx billion liters (an increase of xxx% over the same period last year). Beer

sales reached more than xxx billion (an increase of xxx% over the same period last year).

Revenue structure of Beer industry, H1/2019Domestic beer production and consumption 2010 – H1/2019

Sources: VIRAC, GSO Sources: VIRAC, GSO

Billion VNDBillion litre

3. Vietnam Market

3.1. Beer – Production – Consumption

Beer market has a clear concentration with more than xxx% of domestic market value belonging to large corporations and corporations such as Habeco,

Sabeco, Heineken, Tiger, Carlsberg.

Thanks to the rapidly growing beer consumption in Vietnam, foreign businesses are constantly investing in expanding production.

51

Sources: VIRAC, Euromonitor Sources: VIRAC, Euromonitor

Domestic market share of enterprises, 2017 Top Vietnam beer brand, 2017

3. Vietnam Market

3.1. Beer – Production – Consumption

52

In the first 6 months of 2019, beer inventory is about xxx billion liters, an increase of xxx% compared to the end of 2018. The main reasons are:

Inventories of bottled and bottled beer are xxx% and xxx% respectively;

Sources: VIRAC, GSO

Beer industry inventory 2011 – H1/2019

Tỷ lít

Sources: VIRAC, GSO

Structure of beer industry inventory, H1/2019

3. Vietnam Market

3.1. Beer – Inventory

53

Company Main brand Market share in

2017

Profile of company

3. Vietnam Market

3.1. Beer – Competitive in the industry

54

Sources: VIRAC, GDVC

Million USD

Sources: VIRAC, United Nations Trade Statistics, GDVC

Beer import quantity and value 2010 – H1/2019

Vietnam Import proportion of beer by country, H1/2019

• In the first 6 months of 2019, imported beer reached xxx million

liters worth xxx million USD (growth of xxx% over the same

period).

Million litre

In the first 6 months of 2019, the three main sources of beer supply in

Vietnam are the Netherlands (xxx%), Mexico (xxx%) and Belgium

(xxx%).

3. Vietnam Market

3.1. Beer – Import – Export

55

• Vietnamese beer is gradually entering the world market,

• In the first half of 2019, the export beer output increased over the

previous year to xxx million liters worth xxx million USD.

•


Million USD


Vietnam beer export – H1/2019

Largest Vietnam beer consumption market H1/2019eEquatorial Guinea is the largest market for Vietnamese beer. While Mexico

and the Netherlands are the two biggest beer suppliers to Vietnam.

Million litre

3. Vietnam Market


56

Proportion of 10 largest beer exporter in Vietnam, H1/2019e Proportion of 10 largest Vietnam Beer importers, H1/2019e


Top biggest beer importer in Vietnam, H1/2019e Top biggest beer exporter in Vietnam, H1/2019e

Sources: VIRAC, GDVCSources: VIRAC, GDVC


3. Vietnam Market


57

Currently, beer is being distributed into two main channels:

• On-trade: consumers use the product right at the point of sale is a restaurant, hotel,

beer pub ...

• Off-trade: customers buy products from supermarkets, grocery stores ... and consume

them at another location.

In terms of price control, there are two ways manufacturers can control distributors'

selling prices:



The proportion of beer consumption through

distribution channels,2011 - 2016

Beer price structure to consumers 2018

3. Vietnam Market

3.1. Beer – Distribution System


Fermentation process:

Pressing, filtering and smoothing process:

Annealing Process:

Method of mixing:

Process of extracting grape juice:

58

Wine

Agriculture – Grapes:

3. Vietnam Market

3.2. Spirit – Value chain

Fermentation:

Strong Spirit

Distillation:.

Alcohol brewing stage:

Mixing phase :

59

Bottling process:

Agents - Consumers:


3. Vietnam Market

3.2. Spirit – Value chain

60

Rice and some other grains

Grapes

3. Vietnam Market

3.2. Spirit – Input Material

61

3. Vietnam Market

3.2. Spirit – Input Material

62

Domestic Spirit Production 2010 – H1/2019e


Domestic Spirit Revenue 2010 – H1/2019e


Vietnam's wine industry is facing many difficulties in production and consumption of products. The first 6 months of 2019:

The wine industry produced xxx million liters (up xxx%); consumption reached xxx million liters (an increase of xxx%); sales reached xxx billion (up

xxx%) of which:

• Production of hard alcohol reached xxx million liters (up xxx%); consumption reached xxx million liters (an increase of xxx%);

• Wine production reached xxx million liters (up xxx%); Consumption reached xxx million liters (an increase of xxx%).

Million litre Million litre Billion VND

3. Vietnam Market

3.2. Spirit – Production – Consumption

63

Spirit Inventory, 2012 – H1/2019

Sources: VIRAC, GSO

Million litre

The increase in industrial wine stocks is due to difficulties in product consumption. Currently, the alcohol industry is still in stock about xxx million liters,

including xxx million liters of wine and xxx million liters of spirits; increase xxx% over the same period.

3. Vietnam Market

3.2. Spirit – Inventory

64

Sources: VIRAC Sources: VIRAC

Market share of consumption volume of wine production enterprises

2017Market share of wine brand by output, 2017

The domestic wine market is clearly fragmented, however, Thang Long Wine still holds a significant market share. In addition, domestic enterprises can

only produce low-priced and popular wines.

3. Vietnam Market

3.2. Spirit – Competition in the industry

65

In the market of spirits, Halico is the business with the largest market share with two leading brands: Hanoi Vodka and Hanoi New Rice.

Hanoi Liquor Joint Stock Company (Halico) led the spirits market in 2017, accounting for xxx% of total market consumption, most of which comes

from White Wine. Halico has a long-standing brand name of over 100 years and owns the most modern equipment and production line system in

Vietnam.

Sources: VIRAC Sources: VIRAC

Market share of consumption volume of the spirits producers, 2017 Market share of consumption volume of brands of Spirits, 2017

3. Vietnam Market

3.2. Spirit – Competition in the industry

66

Sources: VIRAC, UNComtrade, GDVC

Million litre Million USD

Vietnam Wine Import, 2010-H1/2019

Imported wine in 2018 into Vietnam, reaching xxx million liters (up xxx%), worth xxx million USD (up xxx% over the same period).

Wine import by coutries, H1/2019


• In the first half of 2019, Vietnam's imported wine output reached xxx million liters, worth xxx million USD (an increase of xxx% over the same

period).

CountryMarket

share

Change over

H1/2018

3. Vietnam Market

3.2. Spirit – Import – Export

67

Mllion litre Million USD

Vietnam wine export, 2010-H1/2019Resources

Export of finished products

In the first 6 months of 2019, Vietnam exported more than xxx

million liters of wine worth US $ xx million (an increase of more than

xxx% over the same period).

Vietnam wine export, H1/2019

Sources: VIRAC, UNComtrade

Sources: VIRAC, UNComtrade

CoutryMarket

share

Change over

2017

3. Vietnam Market


68


Top 10 largest wine export enterprises in Vietnam H1/2019e Top 10 largest wine import enterprises in Vietnam H1/2019e

Top 10 largest wine export enterprises for Vietnam H1/2019e Top 10 largest Vietnam wine import enterprises H1/2019e



3. Vietnam Market


69



Vietnam strong spirit import 2010-H1/2019 Strong spirit import by country, H1/2019


• Imported spirits into Vietnam in the first 6 months of 2019: xxx million

liters and $ xxx million. Although the volume of imported spirits into

Vietnam has decreased by about xxx% compared to the previous year, the

Vietnamese market is still very attractive.


Strong spirit import by commodity, H1/2019

3. Vietnam Market


70



Vietnam strong spirit export, 2010-H1/2019 Strong spirit export by country, H1/2019


• Vietnam's strong liquor export in the first 6 months of 2019 reached: xxx

million liters and worth xxx million USD.


Strong spirit export by commodity, H1/2019

3. Vietnam Market


71


Proportion of 10 biggest Strong-spirit importers of Vietnam

H1/2019e

Proportion of 10 biggest Strong-spirit exporters of Vietnam H1/2019e

Top 10 Vietnam strong spirit importer H1/2019eTop 10 strong-spirit exporter for Vietnam H1/2019e



3. Vietnam Market



Purified water/mineral water

Soda Synthetic syrup - Country of manufacture:

Soft drink:

72


3. Vietnam Market

3.3. Soft drink – Value chain

Juice

Soda:

Filling - capping:

Heat treatment:

Bottling - Agents - Consumers:

Agriculture - Fruit:

Press - Raw Filter - Fruit juice - Clear - Refine:

Mixing:

Pouring box:

Agents - Consumers:

73


3. Vietnam Market

3.3. Soft drink – Value chain

Sugar

Mineral water

Green tea leaves

74

3. Vietnam Market

3.3. Soft drink – Input Material

Fruits

In 2017, Vietnam spent $ xxx million on importing fruits and vegetables from many countries around the world, up more than xxx% over the same period

of 2016.

Spice

75

3. Vietnam Market

3.3. Soft drink – Input Material

76

Domestic production and consumption, 2010-H1/2019

Billion litre Thousand billion VND

Sources: VIRAC, GSO

Consumption structure of Soft Drink (by volume) H1/2019

Sources: VIRAC, GSO

In the first 6 months of 2019, beverage production in Vietnam reached xxx billion liters (up 40% compared to H1 / 2018), consumption reached xxx

billion liters (up xxx% compared to H1 / 2018) worth xxx trillion VND (increased by xxx% over the same period last year). Reasons are:

3. Vietnam Market

3.3. Soft drink – Production – Consumption

77

Billion lite

Sources: VIRAC, GSO

Inventory structure according to the stage product line H1/2019Soft drink inventory volume 2010 – H1/2019

Sources: VIRAC, GSO

Inventory of Beverage industry is high compared to Beer and Wine, increasing strongly in the period of 2015-2018.

3. Vietnam Market

3.3. Soft drink – Inventory

78

Sources: VIRAC, Euromonitor Sources: VIRAC, Euromonitor

Market Share of Vietnam enterprises, 2017 Market share of Vietnam soft drink commodity, 2017

In 2017, Suntory Pepsico Vietnam still led the market (accounting for xxx%), due to owning a series of popular brands in the country such as Pepsi, 7-

up, Twister, Mirinda ...

3. Vietnam Market

3.3. Soft drink – Competition in the industry

79

In the first half of 2019, total beverage exports reached xxx million liters (down xxx% compared to the same period, imports reached xxx million liters

(increase xxx% over the same period).


Billion litre

Soft drink Import-export, 2010 – H1/2019

Imports increased more strongly than exports but production and export value were lower than imports.

3. Vietnam Market

3.3. Soft drink – Import – Export

80


Billion litre Million USD

Vietnam juice import, 2010-H1/2019 Juice import by country, H1/2019


Vietnam's fruit juice import in the first 6 months of 2019 is estimated at xxx million liters and worth xxx million USD (up xxx% over the same period).

Factors that help boost fruit juice import growth:

3. Vietnam Market


81


Billion litre MillionUSD

Vietnam juice export, 2010-H1/2019 Juice export by country, H1/2018


Export material

In the first 6 months of 2019, Vietnam's fruit juice export is estimated at xxx million liters and worth xxx million USD. Vietnamese products are well

received from all over the world, especially in Europe.

3. Vietnam Market


82


Proportion of 10 largest juice export companies in Vietnam, H1/2019e

Top 10 largest juice exporter for Vietnam, H1/2019e

Proportion of 10 largest juice import companies in Vietnam, H1/2019e




Top 10 largest Vietnam juice impoter, H1/2019e

3. Vietnam Market


83



Vietnam soda import volume, 2010-H1/2019 Soda import volume by country, H1/2019


Vietnam's fresh water import in the first 6 months of 2019 reached xxx million liters and was worth xxx million USD. Similar to other beverage

products, foreign soft drinks are very popular in Vietnam market.

3. Vietnam Market


84


Vietnam soda export volume, 2010-H1/2019 Soda export by country, H1/2019e


3. Vietnam Market



85


Proportion of 10 largest soda importers in Vietnam, H1/2019e Proportion of 10 largest soda exporters in Vietnam, H1/2019e

Top largest soda exporter for Vietnam, H1/2019e Top largest Vietnam soda importer, H1/2019e



3. Vietnam Market


3. Vietnam Market

3.4. Risk Analysis – SWOT Analysis

Strength: Weakness:

Opportunity: Threaten:

86

0

1

2

3

4

5


-1

1

3

5 Customer power

87


3. Vietnam Market

3.4. Risk Analysis – Five-forces Analysis

0

1

2

3

4

5

0

1

2

3

4

5


88

Supplier power

Potential Competitors Sources: VIRAC synthesized

3. Vietnam Market


0

1

2

3

4

5

0

1

2

3

4

5

89

Substitutes Risk

Competitor in the industry



3. Vietnam Market


90

3.1 Production Risk

• Input Material Risk:

• Risk of food hygiene and safety :

3. Vietnam Market

3.4. Risk Analysis – Business Risk

91

• Policy risks related to production:

• Risk related to Supply Chain:

• Policy risks related to consumption:

3. Vietnam Market


• Competitive Risk:

• Risks of changing consumer taste:

92

3. Vietnam Market


93

• Traditional Risk:

• M&A Risk:

3. Vietnam Market


Development Goal: Beer Spirit Soft Drink

Product Planning:

Region

Production capacity by

region (million litre)

Investment

Capital 2011 –

2015 (billion

VND)2015 2025

Planning production areas and

investment capital

Source: VIRAC

Source: VIRAC

94

3. Vietnam Market

3.5. Industrial Development Planning

About population:

• Large population, fast growth rate:

• Gold population structure:

• High urbanization rate:

About income:

• Income increased rapidly, middle class increased rapidly:

• Spending increased the most in Asia:

• Economic signs of recovery:

About lifestyle and consumption habits:

• The style of eating and playing changes in the direction of Westernization:

95

3. Vietnam Market

3.6. Outlook and Forecast – Development Motives

• Quality and health are on top priority:

• On the positive impact of FTAs

Other factors

• Policies to create conditions for tourism development:

• The retail market has been and will continue to thrive::

96

3. Vietnam Market

3.6. Outlook and Forecast – Development Motives

Sources: VIRAC, VBA

97

Subsector

Forecast of output

Average growth rate (%)

2019f 2020f

Beer is still the leader in consumption value due to the boom in the period of 2010-2014, but with too many competitors in the market, the price will

fall under the tax reduction effect of FTAs (CPTPP, EVFTA, ...). ) the market appears to show signs of saturation with an average growth rate slowing

down compared to the previous period. Next is Beverage, ranked second in terms of consumption value but has the highest growth rate of the

Beverage industry and higher than the period 2010-2014, reaching xxx%.

Forecast of consumption value of sub-sectors (including domestic and imported products), 2018-2020

3. Vietnam Market

3.6. Outlook and Forecast – Forecast

98

Sources: VIRAC, BMI Sources: VIRAC, BMI

Forecast Vietnam beer consumption 2018f-2022f Forecast Vietnam Spirit consumption 2018f-2022f

Million litreBillion litre

3. Vietnam Market


99

Sources: VIRAC, BMI

Focast Vietnam soft drink consumption 2018f-2022fTrillion VND

3. Vietnam Market


100

Development trends of related industries

• Tourism Industry:

3. Vietnam Market


101

3. Vietnam Market


Retail Industry:

11/1/2011 11/1/2012 11/1/2014 11/1/2015

Market access process with 100% capital of FDI enterprises

Source: VIRAC

Thus, from January 2015, foreign retailers will be allowed to establish 100% foreign-owned enterprises in Vietnam. However, in the past 2 years, Vietnam has been

considered as one of the potential markets with strong attraction for many foreign corporations.

102

3. Vietnam Market


No. FDI CompanyTotal Investment

CapitalPlan/Operation

Source: VIRAC

The project and retail sector plan of FDI enterprises have been implemented in Vietnam

103

3. Vietnam Market


Nội dung




2.3 Rủi ro ngành



104

4. ENTERPRISE ANALYSIS

3. Enterprises analysis

Top typical enterprises in beverage industry in 2018

No. Enterprise Revenue (billion VND)Equity

(billion VND)

Proportion of state

ownership

Total Asset

(billion VND)

Top 10 typical enterprises in beverage industry in 2018

Source: VIRAC

105

106

Beer sector

Billion VND


Revenue of enterprises in 2017 - 2018

4. Enterprise Analysis

4.1. Profitability

107

Strong spirit sector


4.1. Profitability

108

Wine sector

Soft drink sector


4.1. Profitability

109


4.1. Profitability

110

Enterprise management cost / net revenue, 2017-2018



4.1. Profitability

111

TBN

Sales Cost/Net Revenue, 2017-2018



4.1. Profitability

112

Number of receivable days of enterprises 2018 Inventory turnover of enterprises 2018

Unit: day Unit: day

Beer producers manage their debt well and inventory is better than other businesses in the industry.

Sources: VIRAC synthesized Sources: VIRAC synthesized


4.2. Operability

113

In terms of asset utilization in general, businesses are more prominent in using total assets such as SAB, VBL, VDL and SDC.

Using assets performance of Beverage enterprises 2018

Unit: time



4.2. Operability

114

Tan Hiep Phat has a high debt/equity ratio as well as debt/total assets compared to other businesses in the industry.

Repayment ability of Beverage enterprises 2018


4. Enterprises Analysis

4.3. Financial Strength

115

Solvency of Beverage enterprises 2018


4. Enterprises Analysis

4.3. Financial Strength

116

Profit Margin 2017-2018



4.4. Profit Margin

CONTENT

117

5 Financial Statement Appendix

BALANCE SHEET

Unit: VND 2017 2018

A. SHORT-TERM ASSETS

I. Cash and cash equivalents

II. Short-term financial investments

III. Short-term receivables

1. Receivable from customer

IV. Inventory

B. LONG-TERM ASSETS

I. Long-term receivables

1. Long-term receivable from customer

II. Fixed Assets

1. Tangible Assets

2. Intangible Assets

TOTAL ASSETS

A. LIABILITIES

I. Short-term liabilities

II. Long-term liabilities

B. OWNER’S EQUITY

EQUITY

1

REPORT ON BUSINESS RESULTS

Unit: VND 2017 2018

Net revenue from sales and services

Costs of goods sold

Gross revenues from sales and services

Financial income

Financial cost

Cost of sales

Enterprise administration expenses

Net profits from operating activities

Net profits from business activities

Total net profit before tax

Profits after enterprise income tax

Profit after tax of parent company

Total net profit after tax

5. Financial Statement Appendix

Financial statement–Saigon Beer-Alcohol-Beverage Joint Stock Corporation

Source: VIRAC

BALANCE SHEET

Unit: VND 2017 2018






IV. Inventory

B. LONG-TERM ASSETS



II. Fixed Assets

1. Tangible Assets


TOTAL ASSETS

A. LIABILITIES



B. OWNER’S EQUITY

EQUITY

1


Unit: VND 2017 2018


Costs of goods sold


Financial income

Financial cost

Cost of sales









Financial statement–Vietnam Brewery Limited Company

Source: VIRAC

BALANCE SHEET

Unit: VND 2017 2018






IV. Inventory

B. LONG-TERM ASSETS



II. Fixed Assets

1. Tangible Assets


TOTAL ASSETS

A. LIABILITIES



B. OWNER’S EQUITY

EQUITY

1


Unit: VND 2017 2018


Costs of goods sold


Financial income

Financial cost

Cost of sales









Financial statement–Hanoi Beer Alcohol and Beverage Joint Stock Corp.

Source: VIRAC

BALANCE SHEET

Unit: VND 2017 2018






IV. Inventory

B. LONG-TERM ASSETS



II. Fixed Assets

1. Tangible Assets


TOTAL ASSETS

A. LIABILITIES



B. OWNER’S EQUITY

EQUITY

1


Unit: VND 2017 2018


Costs of goods sold


Financial income

Financial cost

Cost of sales









Financial statement–Ha Noi Liquor Joint Stock Company

Source: VIRAC

BALANCE SHEET

Unit: VND 2017 2018






IV. Inventory

B. LONG-TERM ASSETS



II. Fixed Assets

1. Tangible Assets


TOTAL ASSETS

A. LIABILITIES



B. OWNER’S EQUITY

EQUITY

1


Unit: VND 2017 2018


Costs of goods sold


Financial income

Financial cost

Cost of sales









Financial statement–Binh Tay Liquor Joint Stock Company

Source: VIRAC

BALANCE SHEET

Unit: VND 2017 2018






IV. Inventory

B. LONG-TERM ASSETS



II. Fixed Assets

1. Tangible Assets


TOTAL ASSETS

A. LIABILITIES



B. OWNER’S EQUITY

EQUITY

1


Unit: VND 2017 2018


Costs of goods sold


Financial income

Financial cost

Cost of sales









Financial statement–MTV Lam Dong Food Limited Company

Source: VIRAC

BALANCE SHEET

Unit: VND 2017 2018






IV. Inventory

B. LONG-TERM ASSETS



II. Fixed Assets

1. Tangible Assets


TOTAL ASSETS

A. LIABILITIES



B. OWNER’S EQUITY

EQUITY

1


Unit: VND 2017 2018


Costs of goods sold


Financial income

Financial cost

Cost of sales









Financial statement–Thang Long Wine Joint Stock Copany

Source: VIRAC

BALANCE SHEET

Unit: VND 2017 2018






IV. Inventory

B. LONG-TERM ASSETS



II. Fixed Assets

1. Tangible Assets


TOTAL ASSETS

A. LIABILITIES



B. OWNER’S EQUITY

EQUITY

1


Unit: VND 2017 2018


Costs of goods sold


Financial income

Financial cost

Cost of sales









Financial statement–Tan Hiep Phat Corporation

Source: VIRAC

BALANCE SHEET

Unit: VND 2017 2018






IV. Inventory

B. LONG-TERM ASSETS



II. Fixed Assets

1. Tangible Assets


TOTAL ASSETS

A. LIABILITIES



B. OWNER’S EQUITY

EQUITY

1


Unit: VND 2017 2018


Costs of goods sold


Financial income

Financial cost

Cost of sales









Financial statement–URC Vietnam Limited Company

Source: VIRAC

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Documents

VIETNAM BEVERAGE INDUSTRY RESEARCH REPORT Q3/2019€¦ · Global Market 21 2.1 Beer 22 2.2 Spirit 33 2.3 Soft Drink 43 3 Vietnam Market 45 3.1 Beer 47 3.2 Spirit 58. Abbreviation