It entered the Vietnamese market in the late 19th century with the establishment of the Hanoi Brewery and Saigon Brewery.The industry of producing and processing of beer and its products
FOREIGN TRADE UNIVERSITY MAJOR: INTERNATIONAL ECONOMICS TOPIC: SUPPLY, DEMAND AND MARKET EQUILIBRIUM FOR BEER AND BREWING INDUSTRY IN VIETNAM Class: KTEE202.1 Instructor: Nguyễn Thị Tường Anh Researchers Lê Khắc Mạnh Tùng Lê Quang Student ID 2212450071 2212450065 INTRODUCTION Beer is the oldest alcoholic beverage in history, dating back to around 6000 BCE Since then, the beer market has developed and gradually become a familiar drink in our daily lives It entered the Vietnamese market in the late 19th century with the establishment of the Hanoi Brewery and Saigon Brewery.The industry of producing and processing of beer and its products of Viet Nam in recent years has developed dramatically This movement has provided diverse products with various modes and types for the national economic life and satisfied the domestic demand In addition, this sector has contributed significantly to the state budget, creating jobs for the labor force, contributing to ensure livelihood and stabilizing social status Along with global marketing strategies, both foreign and national brands have created significant competitive pressures in the battle for market share of beer Therefore, having a good perspective about beer market is essential For that reason, we decided to choose the topic: “Supply, Demand and Market Equilibrium for beer and brewing industry in Viet Nam” to analyze the domestic market of brewing products and help consumers gain a better understanding about it Hopefully our study can enrich your microeconomic knowledge, and provoke your interest in beer production Thank you and we would be appreciated if you could leave any comments or ideas INTRODUCTION TO VIET NAM BREWING INDUSTRY Since the 1970s, thanks to the renovation and opening policies of the Communist Party and the government of Socialist Republic of Viet Nam, the living standards of the people have significantly improved, and there has been a rapid increase in tourism and foreign investment in Vietnam, which has further stimulated the development of various economic sectors As a result, the Vietnamese beer industry has experienced substantial growth within a short period This progress has been achieved through investments, the revitalization of existing breweries, expansion of joint ventures with foreign countries, and the establishment of new breweries by local, central, private, and joint-stock entities nationwide Currently, with nearly billion liters of beer consumed in 2016, Vietnam has become the third-largest beer market in the world, following Japan and China In 2017, Vietnam entered the top 10 largest beer markets in the world Although beer consumption in Vietnam continues to rise, it is not yet among the top 20 countries in terms of per capita beer consumption The rapid increase in beer consumption has propelled Vietnam to a higher position in the rankings of major beer markets in the region and the world Vietnam is currently the highest beerconsuming country in Southeast Asia, ranking third in Asia after Japan and China, and is in the top 25 worldwide The total volume of beer consumed in Vietnam over the past years (2010-2017) has reached 25.23 billion liters, averaging 3.5 billion liters per year for the Vietnamese population.At the end of 2017, the Vietnamese beer market experienced a major shake-up when 53.59% of the shares of Saigon Beer Alcohol Beverage Corporation (Sabeco), with a value of nearly $5 billion, were acquired by Thaibev Due to the immense attractiveness of the market, leading global beer brands such as Heineken, Tiger, Carlsberg, Budweiser, Sapporo, and Sacabeo have all entered Vietnam As a result, the Vietnamese beer market has become more competitive with the presence of over 30 major global beer brands The increasing number of international beer brands has intensified competition in the Vietnamese beer market, especially in the premium beer segment Faced with the strong offensive of foreign beer brands, domestic beer producers naturally cannot remain idle, and they have implemented new strategies to develop and compete fiercely in the Vietnamese beer market CHAPTER 1: BASES ANALYZE SUPPLY, DEMAND AND MARKET EQUILIBRIUM Supply and demand: Definition Demand Definition: Demand is the quantity of products or services that buyers are willing and able to buy at different prices in certain period of time given everything else constant There are many things that determine the quantity demanded of any good, but when analyzing how market work, one determinant plays thecentral role – the price of goods Quantity demanded is the amount of goods that buyers are willing and able to purchase Law of demand Law of demand is the claim that the quantity demanded of a good falls when the price of the good rises, other things equal Definition: Law of demand The relationship between price and quantity demanded of a good is negative Demand curve The demand curve illustrates how the quantity demanded of a good changes as its price varies Because lower price increases the quantity demanded, the demand curve slope downwards Shift in demand curve: There are many variables that can shift the demad curve Here are the most important: Income Price of related goods (complementary goods and substitute goods) Document continues below Discover more from:tế vi mô Kinh KTE201 Trường Đại học… 961 documents Go to course Chương Cấu trúc 26 thị trường Kinh tế vi mô 100% (43) Tiểu luận Mối quan 22 hệ biện chứng giữa… Kinh tế vi mô 100% (33) Sách tập Vi mô 233 Sách tập vi mô Kinh tế vi mô 98% (64) Giao trinh kinh te 237 12 hoc vi mo Kinh tế vi mô 98% (94) Chương Lý thuyết hành vi người tiêu… Kinh tế vi mô 100% (24) Chuong gioi thieu Tastes of consumers Expectation Number of consumers 30 chung Kinh tế vi mô 100% (21) Supply Definition: Supply shows the amount of commodity that buyers are willing and able to sell at different prices in certain period of time given everything else constant There are many determinants of quantity supplied, but once again, price plays the primary role Quantity supplied: Quantity supplied is the amount of commodity that suppliers are willing and able to sell Law of supply: Law of supply is the claim that the quantity supplied of a good rises when the price of the good rises, other things equal The relationship between quantity supplied and price of a good is positive Supply curve: The supply curve illustrates how the quantity supplied of a good changes as its price varies Because higher price increases the quantity supplied, the demand curve slope upwards Shift in supply curve: There are many variables that can shift the supply curve Here are the most important: Input price Technology Government policy Expectation Number of sellers Shift in demand curve Income Price of related good (Complementary goods and substituted goods) Tastes Expectation Number of buyers Income Price of related good (Complementary goods and substituted goods) Tastes Expectation Number of buyers Income Price of related good (Complementary goods and substituted goods) Tastes Expectation Number of buyers CHAPTER 2: APPLICATION IN BEER AND BREWING INDUSTRY Demand of beer in Vietnam market Number of consumers: - At the end of 2018, Vietnam experienced significant growth both in terms of population and beer consumption With a population reaching 96.9 million people, representing a notable 9.5% increase compared to 2010, the nation witnessed a remarkable surge in the consumption of beer, reaching a staggering 62% growth rate These statistical figures shed light on the immense level of beer consumption within the Vietnamese population.On average, in 2018, each Vietnamese individual consumed approximately 43.3 billion liters of beer This consumption rate translates to an estimated total consumption of 4.2 billion liters of beer throughout the year Such figures highlight the significant role that beer plays in the daily lives and social activities of the Vietnamese people - Several factors contribute to this substantial beer consumption trend in Vietnam Firstly, the country's demographic structure, often referred to as the "golden population," signifies a large proportion of the population being of working age With a growing middle class and an increasing level of disposable income, the desire for leisure activities and socialization has intensified Beer consumption has become intertwined with social gatherings, celebrations, and relaxation, making it an integral part of the Vietnamese lifestyle - Additionally, the rising levels of education and awareness among the Vietnamese population have led to an increased appreciation for quality products Foreign beer brands, such as Heineken, have capitalized on this demand, positioning themselves as premium brands that offer high-quality beer The allure of these international beer brands, with their distinct flavors, premium packaging, and sophisticated branding, has contributed to their rapid growth in the Vietnamese market - Moreover, the stability and positive outlook of Vietnam's economy have bolstered consumer confidence and spending power As the country continues to attract foreign investments and experience economic growth, individuals are more willing to indulge in recreational activities, including beer consumption Consumer’s income: - The development of Vietnam over the past 30 years is indeed highly commendable, driven by the comprehensive economic and political reforms known as “Đổi mới” since 1986 These reforms have played a pivotal role in propelling rapid economic growth, transforming Vietnam from one of the poorest countries globally to a nation with a burgeoning average income - From 2002 to 2018, Vietnam witnessed a remarkable increase in GDP per capita by 2.7 times, reaching over 2,700 USD in 2019 This substantial growth has had a profound impact on the overall wellbeing of the population, with over 45 million individuals lifted out of poverty The poverty rate, which was previously over 70%, has dramatically decreased to less than 6% These statistics highlight the significant improvement in living standards and economic conditions that the Vietnamese people have experienced - The rise in income levels among the Vietnamese population has inevitably influenced their consumption patterns, including the demand for beer As people's incomes increase, they tend to allocate a larger portion of their budget to discretionary goods and services, such as beverages This has resulted in an upsurge in the quantity demand for beer, as individuals have more disposable income to spend on leisure activities and socializing - However, it is important to note that the impact of income on beer consumption is not uniform across all types of beer As income levels rise, there is typically a shift in preferences from lower-quality or "bia hơi" (draft beer) to higher-quality packaged beer or "bia lon." This change in consumer behavior can be attributed to an increased desire for products that are associated with higher quality, branding, and perceived status Price of related goods: Substitute goods: - The entrance of global beer brands like Tiger, Heineken, and Budweiser into the Vietnamese market has significantly impacted the dynamics of the beer industry With their established reputations and high-quality products, these brands have gained a strong foothold and a loyal consumer base in Vietnam However, their presence has also led to an increase in the availability of substitute goods in the beer market - The availability of various beer brands and styles has created a diverse range of choices for consumers As a result, consumers now have the flexibility to switch between different types of beer based on factors such as price, taste, and brand preference When the price of a particular beer brand or type increases, consumers may seek out more affordable alternatives, which can include both local and international beer brands Complementary goods: - Complementary goods have a significant impact on the demand for beer in Vietnam These goods are products or services that enhance the overall beer-drinking experience and are often consumed alongside beer The availability and quality of complementary goods can influence consumer preferences and contribute to increased beer consumption - One aspect of complementary goods is the wide range of snacks and appetizers that pair well with beer When there is a variety of tasty and complementary food options available, consumers are more likely to indulge in beer consumption The combination of beer with delicious snacks creates a desire for people to enjoy the beverage alongside these food items, ultimately driving up the demand for beer - The availability of proper beer glasses and accessories also contributes to the demand for beer Specialized glassware designed for different beer styles enhances the visual appeal and drinking experience, attracting beer enthusiasts - Furthermore, accessories like bottle openers, coasters, and beer koozies add to the overall beer-drinking experience, making it more enjoyable and enticing for consumers Consumers’ taste: - Consumer taste for beer in Vietnam has undergone significant changes over the years Historically, the Vietnamese beer market was dominated by lighter, lower-alcohol content beers, often referred to as "bia hơi" or draft beer These beers were popular due to their affordability and accessibility, and they catered to the local preference for lighter, less bitter flavors - However, with the rapid economic development and rising income levels, consumer tastes for beer in Vietnam have become more diverse and sophisticated There is now a growing demand for a wide range of beer styles, including lagers, ales, stouts, and craft beers Vietnamese consumers are increasingly interested in exploring different flavors, experimenting with new beer varieties, and embracing the global craft beer movement - As a result, the Vietnamese beer market has witnessed the entry of numerous international beer brands, offering a broader selection of options to consumers Brands like Heineken, Tiger, Carlsberg, Budweiser, and craft breweries from around the world have gained popularity and established a strong presence in Vietnam These brands cater to the evolving tastes of Vietnamese consumers who seek premium, high-quality beers with distinct flavors and unique brewing techniques - Furthermore, the emergence of local craft breweries has also contributed to the diversification of consumer taste in Vietnam Craft beer enthusiasts now have access to a growing number of Vietnamesemade artisanal beers, often characterized by their rich flavors, innovative ingredients, and small-batch production methods These craft breweries have not only introduced new beer styles to the market but have also fostered a culture of beer appreciation and education among consumers Supply of beer in Vietnam market Price of inputs: - Beer is a popular alcoholic beverage in Vietnam, enjoyed by locals and tourists alike As with any product, the price of beer is affected by a variety of factors, including the cost of inputs.The inputs of beer can be broken down into three main categories - raw materials, labor, and overhead costs - Raw materials refer to the ingredients used to make the beer, such as hops, malt, and yeast - Labor costs include the wages of the workers involved in the brewing process, from the brewers to the packaging and distribution teams - Finally, overhead costs encompass everything else, from the cost of equipment and utilities to marketing and advertising expenses.The price of inputs can vary depending on a number of factors, including weather conditions, global market trends, and government regulations For example, if there is a drought in the area where hops are grown, the price of hops may increase due to decreased supply Similarly, if there is a global shortage of a particular raw material, such as malt, then the price of malt may increase.Labor costs can also vary depending on a variety of factors, including the level of experience and education of the workers, as well as the cost of living in the area In Vietnam, the minimum wage for workers in the beer industry is currently set at 4.42 million VND per month (approximately $191 USD) However, this may vary depending on the specific job and location.Overhead costs can also have a significant impact on the price of beer In Vietnam, beers industries attach special importance to the marketing campaigns According to the research, every households in Vietnam own at least one television Therefore, many industries focus on TV advertisements to attract customers since watching televsion every meal has become one of many common habits of Vietnamese people They also organize several free tryout of their new beer products, and the industries get profit by getting more consumers as well as the television station claim profit by charging money for amount of advertising time Technologies and equipments: - Vietnam has been known for its beer culture, with Saigon Beer being one of the most popular local brands The production of beer in Vietnam has come a long way, and now involves various technologies and equipment to ensure the consistent quality of the product - One of the most important pieces of equipment for beer production is the brewhouse, which is responsible for boiling, mashing, and lautering the grains to create the wort Breweries in Vietnam have adopted modern brewhouses, which allow for greater control over the brewing process These brewhouses come equipped with sensors and automation systems that ensure the temperature, pH, and other critical parameters are maintained throughout the brewing process This helps to prevent inconsistencies in the brewing process and ensures that the beer produced is of a consistent quality - Fermenters are another critical piece of equipment for breweries in Vietnam After the wort is created, yeast is added to the mixture, and the fermenters help to convert the sugars in the wort to alcohol Modern fermenters are designed to control the temperature and oxygen levels in the fermentation process, which helps to prevent the growth of unwanted bacteria This ensures that the beer produced is safe for consumption and has a consistent flavour.One of the most significant technological advancements in beer production is the use of centrifuges to clarify the beer Centrifuges are used to remove impurities from the beer, which helps to improve the clarity and shelf life of the product This process is particularly important for separating the solid particles and yeast from the liquid, resulting in a clearer and more stable beer.Before the use of centrifuges, brewers relied on time-consuming and labor-intensive methods such as settling tanks and filtration to clarify their beer These methods could take days or even weeks, and they were not always effective in removing all the particles and yeast.The use of centrifuges in beer production has a number of benefits, including: i Increased efficiency: Centrifuges can clarify beer much more quickly than traditional methods, which means brewers can produce more beer in less time ii Improved quality: Centrifugation results in a cleaner and clearer beer, which can improve the flavor and appearance of the finished product iii Cost savings: By reducing the time and labor required for clarification, breweries can save money on production costs.Overall, the use of centrifuges in beer production is a significant advancement because it allows brewers to produce higher quality beer more efficiently and cost-effectively Suppliers - Vietnam is a country in Southeast Asia that is known for its rich cultural heritage, beautiful scenery, and delicious cuisine One of the most popular and well-known beverages in Vietnam is beer, which is enjoyed by locals and tourists alike In recent years, the beer industry in Vietnam has experienced significant growth, with a number of suppliers emerging to meet the growing demand for this popular beverage - One of the largest and most well-known suppliers of beer in Vietnam is Saigon Beer Alcohol Beverage Corporation (Sabeco) Sabeco is a state-owned company that was established in 1875, and it is the largest beer producer in Vietnam The company produces a wide range of beer brands, including Saigon Beer, 333 Beer, and Saigon Special Sabeco's beers are popular not only in Vietnam but also in other countries, including Cambodia, Laos, and China - Another major beer supplier in Vietnam is the Hanoi Beer Alcohol and Beverage Corporation (Habeco) Habeco is also a state-owned company that was established in 1958, and it is the second-largest beer producer in Vietnam The company produces a range of beer brands, including Hanoi Beer, Truc Bach Beer, and Ho Tay Beer Habeco's beers are popular in Northern Vietnam, and the company has a strong presence in the country's major cities - In addition to Sabeco and Habeco, there are also a number of smaller beer suppliers in Vietnam that play an important role in the country's beer industry Expectations: - Vietnam has a rich and diverse beer culture that has been growing rapidly in recent years As a result, there are many expectations surrounding beer in Vietnam - both for locals and tourists In this essay, we will explore some of the most important expectations of beer in Vietnam - First and foremost, beer is widely considered to be a social lubricant in Vietnam It is a drink that brings people together and helps to create a relaxed and convivial atmosphere Many Vietnamese people enjoy drinking beer with friends and family, often at outdoor restaurants and cafes where they can enjoy the warm weather and lively ambiance As such, one of the primary expectations of beer in Vietnam is that it should be easy to drink and refreshing - Another important expectation of beer in Vietnam is that it should be affordable Vietnamese people are very budget-conscious and are always looking for good value for their money As such, beer is often priced very competitively in Vietnam, with many popular brands available for just a few dollars per bottle This affordability has helped to make beer a popular drink of choice for many Vietnamese people - In addition to affordability, another expectation of beer in Vietnam is that it should be widely available Whether you are in a big city or a small town, you are likely to find a place to buy beer in Vietnam Many convenience stores and supermarkets stock a wide range of both local and international beer brands, while there are also many bars and restaurants that specialize in serving beer This accessibility has helped to make beer a ubiquitous alcohol product CHAPTER 3: CONCLUSION The law coming into effect on January has been effective in adjusting the drinking habits of many people It is forecasted that the beer industry growth rate in the year will not maintain the double-digit level as in previous years; reach 6-7 per cent in the following years, although each year Viet Nam has million more people of legal age to drink alcoholic beverages In the stock market, shares of the two “giants” in the beer industry, Sabeco and Habeco, have dropped from 0.4 per cent to 0.8 per cent Meanwhile, the share value of the entire industry will decline by nearly 13 per cent in 2019 Experts predict that the beer and wine industry will adjust towards a shrinking trend by 2020, in which small businesses will be most affected Alcoholic beverages in Viet Nam have to pay taxes at two stages of import and domestic consumption, including three different taxes: import tax (from 5-80 per cent depending on type of FTA), tax value added (10 per cent) and excise taxes (up from 50 per cent to 65 per cent in 2018) This can affect the profitability of beer companies, especially those in the mid-end segment, as this is a competitive segment and customers are most vulnerable to the impact of the best-selling prices Production license can be considered a major obstacle for new businesses To open a beer factory in Viet Nam, businesses must be licensed by the Ministry of Industry and Trade While the regulations are quite clear, implementation can be difficult Even if all provinces were willing to facilitate new breweries to collect taxes, the licensing would depend on the beer and beverage planning of the ministry, which may have been registered many years in advance According to VIRAC, Viet Nam’s beer industry still faces many challenges such as communication, risks of changing consumer tastes and M&A, requiring continuous efforts and improvement to enhance the position in the international market — VNS Based on researches, the beer industry in Vietnam has experienced significant growth and development over the past decade The market is dominated by a few major players, including Sabeco and Habeco, but there are also a number of smaller breweries that have emerged in recent years The government's efforts to promote domestic production and reduce dependence on imported beers have also contributed to the industry's growth However, there are challenges for beer industries in Vietnam such as the pandemic ( COVID-19) lead to the decline in sales because many restaurants and bars were closed during the quarantine.Overall, the beer industry in Vietnam has great potential for further growth and innovation, but navigating the challenges will require strategic planning and adaptation to changing market conditions This is our esay written about “Supply, demand and market equilibrium for beer and brewing industry in Vietnam” There might be some erros so if you have any feedback or comment, we would appreciate them REFERENCES VietNamNet News , Available at: https://vietnamnet.vn/en/vietnams-beer-market-expectsbig-changesin-2020-645417.html? fbclid=IwAR1jv33MQ6OgrNd3XJ9XLTicRavIyMky4Yay7YvjTiUFixXA4rGmb4l3w7E (Accessed: 15 June 2023) IndexBox, Inc (2023) , Available at: https://www.indexbox.io/store/vietnam-beer-market-analysis-forecast-sizetrends-and-insights/?fbclid=IwAR3jCrmZo1YxLqvp09IOXs0IFTKcym8HP6zm1MTqxPiPmtDh8sh4ttY-O4 (Accessed: 15 June 2023) (no date) Available at: https://www.brandsvietnam.com/14375-Doanh-nghiep-nuoc-ngoai-xau-xe-nganh-bia (Accessed: 15 June 2023) (no date) Available at: https://www.brandsvietnam.com/18313-4-2-ty-lit-biatrong-nam-2018-Nguoi-Viet-uong-nhieu-hon-Thai-Singapore (Accessed: 15 June 2023) Admin (2020) , Available at: https://thaitan.com/thi-truong-bia-viet-nam-thay-doi-ra-sao-sau-gan-10nam/ (Accessed: 15 June 2023) More from: Kinh tế vi mô KTE201 Trường Đại học… 961 documents Go to course 26 22 233 237 Chương Cấu trúc thị trường Kinh tế vi mô 100% (43) Tiểu luận Mối quan hệ biện chứng giữa… Kinh tế vi mô 100% (33) Sách tập Vi mô Sách tập vi mô Kinh tế vi mô 98% (64) Giao trinh kinh te hoc vi mo Kinh tế vi mô 98% (94) Recommended for you