MINISTRY OF FINANCE UNIVERSITY OF FINANCE — MARKETING
TRƯỜNG ĐẠI HỌC TÀI CHÍNH - MARKETING INTERNATIONAL MARKETING GROUP EXERCISE 1 : SABECO & THE JOURNEY TO THE INTERNATIONAL MARKET
Group Members Student Code Paticipation Lé Chau Nhi 2121000346 20% Phan NgQc Ha 2121003416 20% Ngo NgQc Han 2121000359 20% Phạm Thị Thu Hương 2121003419 20% Huynh Dang Minh Quan 2121012582 20% Faculty: Marketing Class: CLC_21DMA04
Tutor: Dang Huynh PhuOng
Trang 2TABLE OF CONTENTS
Trang 3LIST OF TABLES
Trang 4LIST OF FIGURES
Trang 5REQUIREMENT
Requirement 1: Choose a Vietnamese company which have no international presence, one only appearing in Vietnamese Market, then give analysis to answer folowing questions:
@ Why did they only sell their product in Vietnam?
Trang 6REQUIREMENT |
@ General Information
* Company name : SAIGON BEER — ALCOHOL — BEVERAGE CORPORATION (SABECO)
¢ Headquarter : 5th floor, Vincom Center Building, 72 Le Thanh Ton, Ben
Nghe Ward, District 1,Ho Chi Minh City, Vietnam SAB ECO
¢ Main business : Producing and trading Beer, Wine and Beverage (FMCG
sector, B2B)
@ Vision
Developing SABECO into a top corporation leading beverage industry of Vietnam, has a position in the region and international market @ Mision ¢ Contributing to the development of © To fulfill all obligations towards the State on Vietnam's beverage industry world level the basis of business transparency ¢ Promote Vietnamese culinary culture ¢ Actively participate in community activities e Bring practical benefits to shareholders, ¢ Ensure development towards international customers, partners, employees and society integration
¢ Improving quality of life by providing high ¢ Fullfill International food safety and
Trang 8Business Model
Table 1 SABECO Business Model
Key
Partners
26 Subsidiary Companies 18 Joint Stock Companies
Key
Activities
Marketing Campaign Manufacturing
Key
Resources Mass Production : 26 Factories in VietNam , 200.000 sales locations around the world
Beer’s Making Tech Beverage’s Brand 333, SaiGon Beer, Xa
XỊ,
Value Propositio
Nn
Traditional Value (Original Taste of Product, Familiar Brand}
Accessibility by diversity in distribution channel Social Value through social campaign
Custumer Relationship S
Create online content
or offline event (music fest} to engage customers and push comsumption Channels Both On & Off trade 10 main _— suppliers across VietNam Apply new distribution
managerment system
(DMS; WMS; SFA; S&OP) Custumer Segments Mass Market (some product line has preference customer) Ex:
SaiGon Chill & SaiGon Special focus on upper- middle class
customers
While “Saigon Export focus on foreign market
Trang 9
@ Product Categories
Figure 2 SABECO’s Beer Categories
@ Bia BIA SAIGON
FÌ ị le ae — = : _ 3 a
Bia Soigon Gold Bia Soigon Chill Bio Saigon Special
uf Bia Saigon Lager
Trang 10Why Sabeco still not go international ?
Sabeco already has export to the international market BUT, their active in the international market is so small that can be consider “insignificant” Direct quote from Sabeco’s Annual Report
(2022) : “ export segments only accounted for an insignificant proportion of the Group’s revenue and did not require a separate report Accordingly, the financial information presented mainly reflected the business activities of the Group in the territory of Vietnam.”
We suggest there are several reason that make Sabeco still don't really want to expand and gradually shift their focus to the international market
@ The Pandemic !
Pandemic had cause serious damage to the development of Sabeco as well as beer industry in general Sales and Revenue of Sabeco had suffer huge drop in 2020 and 2021 due to the Pandemic (-5.68% in 2020 and about -26.22% in 2021) Despite the decrease in revenue, SG&A remained at a high level and rebounded quickly after the pandemic ended duel to the increase simultaneously of raw material (malt,aluminum, labels ) and labour cost These figures show the drop in beer consumption the VietNam market which is always in the top 10 countries that consume the most beer in the world This indicates that the beer market is not at a good shape at the moment
Trang 11The mission of leading the beer market in VietNam !
In the shareholder structure of Sabeco, even though there are more than 60% are belong to foreign shareholders (53,6 of Vietnam Beverage Company Limited (ThaiLan) & 9% of other Foreign shareholders) But there are still a significant portion control by the gorvernment/ state (about 36% of State Capital Investment Corporation) [CITATION SAB22 \I| 1033 ] This make Sabeco isn’t an international corp but still a “VietNamese company” to some extend
And just like most of other VietNam companies, dominating and take over the home market - Vietnam is strongly emphasized That why the Vision and Mission of Sabeco are alway include VietNam, these mention the wisdom to grow Sabeco into a “National Company”, making Sabeco the face of Vietnam's beer industry
For these reason, Sabeco still mainly forcus on growing in VietNam market rather than go international
What challenges would SABECO face when entering into an international market?
« Big Market - Big Competitors
As every other company have to deal with when they first expand into the international market, SABECO has to deal with a lot of “Whale” dominating the beer industry A report of BARTHHAAS (2021 -2022) had shown that SABECO was at rank 17 in the world top 40 brewing groups, with about 0.8 % share of world beer production This is remarkable for a Vietnamese business However, Sabeco still has to face many competitors with huge scale and potential such as Heineken or Carlsberg
Trang 12Figure 6 The world top 40 Brewers by BARTHHAAS TOP 40 BREWERS @® 100 % 90 % Gg ember 4 i 2017 2018 2019 2020 2021 (as of 31 2021) as Beer output Share of world Ranldng Brewery Country 2020 in mill hl beer production “ 1 AB InBev Belgium — my a 31.3 % “ 2 Heineken Netherlands 231.2 12.4 % + 3 Carlsberg Denmark 119.6 6.4 % oe 4 China Res Snow Breweries China 112.2 6.0 %
s 5 Molson Coors USA/Canada 84.0 4.5 % “ 6 Tsingtao Brewery Group China 76.0 4.1% k3 7 Asahi Group Japan 57.4 3.1% “ 8 BGI / Groupe Castel France 40.0 2.2% “ 9 Efes Group Turkey 37.9 2.0 %
2 10 Yanjing China 33.5 1.8 % 8 11 Constellation Brands USA 32.6 1.8 % 12 Grupo Petrépolis Brasil 29.5 1.6 % “ 15 Kirin Japan 26.1 1.4% 3 14 Diageo (Guinness) i Ireland 21.0 1.1% 8 15 ccu Chile 19.2 1.0 % 16 San Miguel Corporation — Philippines 15.7 0.8% ẤỀ 17 Saigon Beverage Corp.(SABECO) Vietnam 14.5 0.8 % Source : [ CITATION Bar22 \I 1033 ] @ Difficulty by Differences Beer or Alcoholic can cause a lot of social problem, so it is fundermantal for a gorvenment to restrict and control the consumtion of those Vietnam has a law banning the sale of alcohol to people under the age of 18, but in fact, young Vietnamese can still access alcoholic beverages very easily This is also happening in some other Asian countries, The New York Times wrote an article about this phenomenon in Thai Lan, where they ironically called it "Unevenly Enforced"
This not so true with regions that are far apart, the cultural and social differences in these regions are greater, so there will be distinct points For example in the US, which is known for its strict legal policies on alcohol, a person can face hefty financial penalties and even jail time for selling beer to people under the age of 21 This is also true to a lot of Europe contries
Trang 13What international market would you recommend SABECO to explore?
After some analysis, we would highly recommend
SABECO to explore the European market
@ Beer Consumption
Europe has a strong beer culture and is known for its diverse beer styles and traditions The European market offers a wide range of opportunities for Sabeco to introduce its unique beer products to beer enthusiasts who appreciate different flavors and styles
According to the Brewers of Europe (The Brewers of Europe) , Europeans consumed over 39 billion liters of beer in 2019 The per capita beer consumption in Europe is among the highest in the world, with countries like the Czech Republic, Austria, and Germany leading the rankings
@ Market Size
Europe has a significant market size with a large population and diverse economies Countries such as Germany, the UK, France, and Belgium are known for their beer consumption and offer potential growth opportunities for Sabaco
Europe is home to approximately 740 million people, offering a significant consumer base for beer products Major European beer markets such as Germany, the UK, France, Spain, and Italy provide substantial opportunities for expansion [ CITATION Ric20 \ 1033 ]
@ Craft Beer Trend
There is a growing trend of craft beer consumption in Europe, with an increasing number of consumers seeking out specialty and artisanal beers Sabaco, with its focus on quality and craftsmanship, can tap into this market segment and position itself as a premium craft beer brand The craft beer market in Europe has been growing steadily in recent years According to Statista, the craft beer market size in Europe was estimated at around €4.35 billion in 2020 and is projected to reach €8.45 billion by 2025 The number of microbreweries and craft beer bars has been increasing across Europe, catering to the demand for unique and high-quality beer.[ CITATION Chr89 \| 1033 ]
@ Export-Friendly Environment:
Europe has established trade agreements and a relatively open market for imported goods, making it easier for Sabaco to enter and operate in the region The European Union's single market and customs union facilitate trade and simplify logistics for exporters
Trang 14@ Cultural Appreciation
European consumers often value and appreciate products with a strong cultural heritage Sabaco, as a Vietnamese beer brand, can leverage its unique Vietnamese identity and brewing techniques to appeal to European consumers seeking authentic and exotic experiences
Trang 15REQUIREMENT II Compare and Contrast between Polycentric & Geocentric Management @ Definition Polycentric Management Is an approach where a company treats each foreign subsidiary as a _ separate and independent entity The decision-making authority is decentralized to the local
management team
Key characteristics : + Local Autonomy: Each significant autonomy and decision-making
subsidiary has independence in * HCN Dominance: Key management positions are filled by host-country nationals
« Limited Integration: There is limited integration and coordination be seen the headquarters and subsidiaries
Polycentric Management
¢ Local responsiveness: Local managers have a better understanding of local markets => respond quickly to changes & opportunities
e¢ Cultural sensitivity: The use of host-country nationals enhances cultural sensitivity & adaptation => reducing the chances of cultural clashes ¢ Government relations: Local managers have better relationships & understanding of the host country's government => facilitating smoother operations @ Benefits Geocentric Management Is an approach where a company takes a global perspective and integrates its subsidiaries into a unified, cohesive organization
Key characteristics :
¢ Global Integration: High level of coordination, collaboration, and integration between the headquarters and subsidiaries
¢ Best-Person Approach: Management positions are filled with the most suitable individuals, regardless of their nationality
¢ Transfer of Knowledge: Emphasizes the transfer of expertise different subsidiaries, facilitating learning and innovation knowledge and across
Source : [ CITATION Chr89 \I 1033 ] , [CITATION Dan07 \I 1033 ] Geocentric Management
¢ Global coordination: The centralized allow better alignment of strategies, sharing of best practices & resource optimization
¢ Talent utilization: Allows the company to leverage the best talent from around the world, enabling a diverse & highly skilled workforce
¢ Knowledge transfer: The emphasis on knowledge sharing fosters innovation & the spread of best practices across the organization
Trang 16@ Drawbacks
Polycentric Management
¢ Lack of global coordination: The decentralized can result in => A lack of coordination & communication between subsidiaries, leading to inefficiencies or missed opportunities
¢ Limited career mobility: As the top management positions are typically for local managers => Reduced career advancement opportunities for employees from headquarters
Geocentric Management
¢ Resistance to change: Local managers may resist or feel threatened by the increased influence of headquarters, leading to challenges in implementing global strategies
¢ High costs: The centralization of decision- making and coordination may result in increased costs due to the need for extensive communication, coordination mechanisms
Source :[ CITATION Dan07 \I 1033 ][ CITATION Ric20 \I 1033 ]
@ Overall Chanllenges
Polycentric Management
® Lack of Global Integration
® Communication and Coordination Issues ¢ Limited Transfer of Knowledge
® Limited Career Mobility for Headquarters’
Employees
Geocentric Management