A beer production line at SABECO's factory. Photo courtesy of the firm

HÀ NỘI — In a strategic move aimed at consolidating its position as Việt Nam's dominant beer producer, Saigon Beer - Alcohol - Beverage Corporation (SABECO) has successfully completed the acquisition of Saigon Binh Tay Beer Group (Sabibeco).

This deal will propel Sabeco into the lead as the largest beer enterprise in the country, setting its sights on further market expansion and securing its status as the undisputed No 1 beer brand in Việt Nam in 2024.

The acquisition deal sees SABECO acquiring over 37.8 million shares, which represents a 43.2 per cent stake in Sabibeco. With the transaction expected to close between October 31 and December 25, 2024, SABECO’s stake in Sabibeco will rise from 16.4 to 59.6 per cent, making SABECO the parent company of Sabibeco.

The purchase price of VNĐ22,000 per share, a 24 per cent premium over Sabibeco's current market price, brings the total investment to nearly VNĐ832 billion. This will significantly enhance SABECO’s control over Sabibeco’s assets, which are known for their popular brands like Sagota, Saigon Special, Saigon Lager, Saigon 333 Export, and Saigon Export, as well as barley drinks and malt beverages.

After the merger, SABECO's total beer production capacity will increase by 25.4 per cent, reaching 3.01 billion litres annually. This expansion will solidify its position as the leading beer producer in Việt Nam, surpassing competitors both in terms of production and market influence.

SABECO’s aggressive acquisition strategy comes at a time when many competitors in the Vietnamese beer industry are struggling. Recent financial reports reveal a troubling trend: declining revenues, shrinking profits, and the scaling back of operations across the sector. This downturn is exacerbated by the rising competition and ongoing challenges in the local economy, including strict regulations on alcohol consumption and price pressures.

Data from NielsenIQ (NIQ) highlights that the domestic beer market is highly concentrated, with the top four manufacturers - SABECO, Heineken, Habeco, and Carlsberg - accounting for more than 90 per cent of market revenue. While SABECO is making bold moves to grow, its competitors are facing difficulties. Heineken, for example, reported a 4.7 per cent decline in global beer output, driven largely by decreased sales in Việt Nam and Nigeria. In Việt Nam, Heineken's revenue dropped by 7 per cent in the first half of 2024, while profits saw a steep 56 per cent decline.

Similarly, other local beer producers such as Habeco and Saigon-Western Beer have also seen profits shrink. Habeco’s profit fell by 18 per cent, and Saigon - Phu Tho Beer Company posted a loss. These setbacks highlight the tough market conditions and the intensifying competition within the sector.

SABECO's resilient strategy

Despite these challenges, SABECO has managed to sustain steady growth. In the first half of 2024, the company reported revenues of VNĐ15.3 trillion, a 5 per cent increase from the same period in 2023. Net profits also grew by 6 per cent, reaching VNĐ2.3 trillion. SABECO's leadership attributes this growth to effective price increases, despite the tough economic environment and stricter regulations, such as the implementation of Decree 100/2019/NĐ-CP, which has impacted alcohol sales and distribution.

Looking forward, SABECO has set an ambitious revenue target of VNĐ34.4 trillion for 2024, a 13 per cent increase from the previous year, with a profit forecast of VNĐ4.58 trillion, marking a 7.6 per cent rise. This growth strategy is underpinned by the company's ongoing investment in mergers and acquisitions, setting the stage for SABECO to not only weather industry challenges but also thrive amid increasing competition.

Through the acquisition of Sabibeco, SABECO is not just expanding its production capacity but also cementing its leadership in the Vietnamese beer market. By surpassing competitors in scale and market share, SABECO is positioning itself to continue dominating the industry well into the future. With its sights set on increasing market share and maintaining its leadership position, the company’s bold strategy in 2024 signals its intent to firmly claim the "throne" of Việt Nam’s beer market. — VNS