By Jenny Vaughan
HANOI, Vietnam―Sloshed back at rowdy open-air “bia hoi” day and night, beer is Vietnam’s tipple of choice and now its cash-strapped government is drawing on the nation’s penchant for lager to raise billions of dollars by selling stakes in state-owned brewers.
The unprecedented divestments in two state crown jewels, the makers of the much-glugged Saigon and Hanoi beers, are expected to net as much as $2.2 billion.
The sale comes as part of long-promised reforms to privatize bloated state firms, which official figures show contributed about one third of the country’s GDP last year.
It is hoped the reforms will set the communist country back on track to meet its ambitious economic targets and jumpstart growth which has slowed this year.
For Vietnam’s government, beer is a logical place to start.
With a population of 93 million people, the country is one of Asia’s leading swillers of beer.
Vietnamese consumed more than three billion liters of the cold stuff last year, according to Euromonitor marketing firm.
That thirst has piqued interest from foreign brewers, eager to tap growth markets at a time when sales in many developed markets in Asia are forecast to plateau.
“Vietnam has one of the fastest growing beer consumption markets in the world, and that’s obviously an appeal,” said Kevin Snowball, CEO of PXP Vietnam Asset Management in Ho Chi Minh City.
Down it, down it
The government said this month the two companies, Habeco and Sabeco, would be listed in the first three months of 2017 and would be open to local or foreign bidders.
For the Vietnamese who crowd into the open-air bia hoi markets during lunch, dinner and for some, in between, privatization promises to keep the good times rolling―as long as the buyouts don’t mess with flavor.
“I don’t want beer Hanoi to be affected by the taste of Carlsberg, I don’t want beer Saigon to become so similar to a Sapporo... the key is to keep the distinctive taste of the beer,” said Duc Thang, 48, speaking over a glass of cold brew.
Like millions of others across the country, Thang comes to the bia hoi to unwind.
“At a bia hoi you can talk about so many things―you can chit-chat, talk business, family problems. It’s easier to talk when you have one or two beers.”
Some major names already have a foothold here―Heineken has about 17 percent of the market, competing with other players like Carlsberg and Sapporo―and reports say Thailand’s ThaiBev and Singha Beer may now be ready enter the fray too.
But the sales could instantly transform a foreign buyer into a top brewer: Sabeco enjoys about 45 percent market share, while Habeco has 17 percent, according to Euromonitor.
The government says it will sell its 90 percent stake of Saigon Beer Alcohol Beverage Corp (Sabeco) for $1.8 billion, and its 82 percent stake in the Hanoi Beer Alcohol and Beverage Joint Stock Corp (Habeco) for $400 million.
Both companies declined to speak to AFP.
‘The right time’
Economists say the government is selling the stakes because it is thirsty for cash.
Public debt hit 62 percent of GDP this year according to official figures, and is climbing closer to the government-sanctioned debt ceiling of 65 percent of GDP.
“It’s the right time for the government to consider selling a number of state-owned companies to get more for the budget,” economist Pham Chi Lan told AFP.
Selling off controlling stakes is also expected to help clean up corporate governance and boost productivity, which have not happened with piecemeal selloffs in the past.
“Many of these benefits will only come if there’s a strategic investor that really takes on a majority stake,” said Sebastian Eckardt, lead economist for the World Bank in Vietnam.
Some credit a new regime of communist leaders in power since April with making good on promises to privatize, but will wait to raise a glass until the deals are done.
“We’re very positive on this, as long as it happens, because it’s been talked about for a very long time,” said Snowball.
COMMENT DISCLAIMER: Reader comments posted on this Web site are not in any way endorsed by Manila Standard. Comments are views by manilastandard.net readers who exercise their right to free expression and they do not necessarily represent or reflect the position or viewpoint of manilastandard.net. While reserving this publication’s right to delete comments that are deemed offensive, indecent or inconsistent with Manila Standard editorial standards, Manila Standard may not be held liable for any false information posted by readers in this comments section.