VietNamNet Bridge – Swallowing up the existing domestic manufacturers proves to be the best for foreign investors to expand their business in Vietnam.

The bitterness of beer

In 1994, Vietnamese Hue Brewery teamed up with Danish Carlsberg to set up a 50-50 joint venture, Huda.

After the two decades of operation, in 2011, Carlsberg showed its intention to acquire the whole enterprise by buying the contributed capital from the Thua Thien – Hue People’s Committee and turning Huda into a 100 percent foreign invested brewery.

The affair was believed to be a wise move taken by Carlsberg to implement its strategy on dominating the central region’s beer market.

However, those who understand Carlsberg well, may realize that this is the plan the big guy regularly pursues when trying to acquire something. It set foot on the Vietnamese market in 1993 by setting up a joint venture with Viet Ha Brewery Company. Carlsberg holds 60 percent of the South East Asia Brewery, while the initial capital contribution was 35 percent only.

In 2007, Carlsberg bought 30 percent of stakes of the Ha Long Brewery Company. In late 2007, Habeco and Carlsberg set up a new joint venture in Ba Ria – Vung Tau. The Ministry of Industry and Trade has decided to choose Carlsberg as Habeco’s strategic partner by selling more stakes to Carlsberg.

The British group Diageo is willing to pay $90 million to obtain 45 percent of Halico’s stakes, the Vietnamese biggest liquor manufacturer, despite the bad business performance of Halico.

Masan, which has received the investment worth $200 million from a US fund has announced it is trying to take over the Phu Yen Brewery and Drinks Company.

Kirin Holdings, a Japanese group, which once got involved in the Tiger acquisition case, has bought Interfoods, the owner of Wonderfarm tea brand. AB Inbev plans to arrive in Vietnam late next year.

Sweets market is also bitter

South Korean Lotte, which was just a partner in a joint venture with Vietnamese Bibica, now attempts to turn Bibica into its 100 percent foreign owned enterprise.

It is obvious that the leading South Korean sweets manufacturer tries to develop Bibica into the distribution network for Lotte in Vietnam. Meanwhile, Lotteria fast food shops, Lottemart shopping malls, hotels would give more power to the conglomerate.

Both the turnover and profit of Bibica have increased by two folds after four years of cooperation with Lotte. However, while the turnover increases steadily by 15-20 percent very year, Bibica’s profit has decreased over the last two years.

Glitco, the Japanese sweets manufacturer, has also been expanding its business in Vietnam by cooperating with Kinh Do. Sources said Nabati, an Indonesian brand well known for high sales, is planning to set up a factory in Vietnam.

The other well-known brands in the world, though having not set foot in Vietnam, have also been trying to bring their products to the market with great potentials.

A report of the Industry Policy Institute under the Ministry of Industry and Trade showed that the food processing industry has been growing well with the growth rate of 17 percent in 2006-2010. Especially, the sweets production saw an impressive growth rate of 35 percent.

In 2012, Vietnamese consumed 2.38 billion liters of beer, up by 8 percent over the previous year.

D. Anh