international marketing group exercise 1 sabeco the journey to the international market

-- on ng nh ng ng Xn 5 What challenges would SABECO face when entering into an international market?.... 6 What international market would you recommend SABECO to explore?..... ¢ What ch

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

Lé Chau Nhi 2121000346 20%

Faculty: Marketing

Class: CLC_21DMA04

Tutor: Dang Huynh PhuOng

Ho Chi Minh City — 2023

TABLE OF CONTENTS LIST OF TABLES .220000ceccee eens eeee teen eens teens eens esse sees eeeeseeeeseeaeeea eee aaa aaa KD BE lI LIST OF FIGURES - - 2n HH TT HH HH Ho KD BE BH ll REOUIREIMIENT - - - LG - Gì KH eee eee TH TH HD Hy BE IV REOUIREIMENT | - - S22 In HH HH KH Hà KH KH HH 1 Why Sabeco still not go international ? on ng nh ng ng Xn 5 What challenges would SABECO face when entering into an international market? 6 What international market would you recommend SABECO to explore? 8 REOUIREIMENT lÍ - - 2-5 2S IS HH ĐK TH tk BE it BE 10 Compare and Contrast between Polycentric & Geocentric Management 10 Which orientation would you recommend they adopt when diversifying? 0.+0 12 REFERENCES LIST - QC non nn n TH nhìn nh nh BH SH TH BE SN A

LIST OF TABLES

Table 1 SABECO Business IMlodel - - acc cm ng ng HH ng ng Em HH By

LIST OF FIGURES Figure 1 Core Value of SABECO ccccssssceeeccecsssseneeeeescesneeeenensoaceseseasneeoaeeeseeneseasneseaneess Figure 2 SABECO”s Beer Cat©EOrÏS nọ TY nh TH ng g nh Figure 3 SABECO’s Wine & Beverage Cat©egOFÏ@S cm HH Hy nh g cm mến Figure 4 SABECO”s Sales & Income (2018-2022) - - c2 HH ng nh guu Figure 5 SABECO“s SG&A Expense (2018-2022)) - - - - c HH HH Hi kh Xn Xa Figure 6 The world top 40 Brewers by BARTHHAAS Snnnnn nen cv

REQUIREMENT

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?

¢ What challenges would they face when entering into an international market?

® What international market would you recommend they explore?

Requirement 2:

These are four types of company orientations: (1) ethnocentric, (2) polycentric, (3) regiocentric, (4) geocentric management Discuss, Compare and Contrast the two orientations out of four (2/4) Keep the Vietnamese Corp your group had chose above, then use these analysis ask an answer

to questions below:

¢ What would be the different challenges faced with each orientation

¢ Which orientation would you recommend they adopt when diversifying?

REQUIREMENT |

@ General Information

* Company name : SAIGON BEER — ALCOHOL — BEVERAGE CORPORATION

(SABECO)

¢ Headquarter : 5th floor, Vincom Center Building, 72 Le Thanh Ton, Ben

¢ 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

quality, safe & nutritious beverage products hygiene standards “An food hygiene &

environmental protection”

@ Core Value

Figure 1 Core Value of SABECO

“ih

we

Social responsibility

+e

“=

improvement development

Source : [CITATION SAB22 \I 1033 ]

Business 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

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

Cost Structure

Marketing Campaign & Sales

Manufacturing

Revenue Streams Invest in Subsidiary Companies and Joint ventures Retails on On & Off trade flatforms

Source : [ CITATION Ale10 \1 1033 ] & Authors Analysis

@ 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

Bia Saigon Export

333 BIALAC VIET

Bia Saigon Coffee Infused Beer

@ Rudu

bis

Caravelle Red Rhum Rượu nhẹ

Sal Vy “ = Rượu Nừng Hương Rugu goo Lia Thom Binh Tay

be

Rượu Đế Bình Tây Rượu Để Nếp Binh Têy

® Nước giỏi khót

alii | ,Í vì S Wine & aie Categories

Nước Yến Nh:

Nom Phương Chương D Dương 'Chưng Dương

Di ng Do

Source : [CITATION SAB22 \I 1033 ]

Why 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

Figure 4 SABECO’s Sales & Income Figure 5 SABECO’s SG&A Expense

30000

4000

25000

10000

1000

mSales/RevenuelrilileMNÐIncome Net Income Trilan.VNĐ

Expense

Source : Summary from [CITATION SAB221 \I 1033 ]

& SABECO’s Annual Income Statement — [CITATION Wal23 1\ 1033 ]

The 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

Although Sabeco has succeeded in competing equally with these competitors in the Vietnamese market (Sabeco is only behind Heineken in terms of beer market share in Vietnam with more than 30% market share), but in order to be able to develop in the international market where there are many differences in culture, law, great competitiveness, requires Sabeco to put in much more effort

Figure 6 The world top 40 Brewers by BARTHHAAS

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 %

3 14 Diageo (Guinness) i Ireland 21.0 1.1%

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

Differences are always a big challenge for integration, whether in daily communication or in corporations that want to expand the market Therefore, before entering these markets, Sabeco has to invest a lot in market research to be able to reduce the probability of failure to as low as possible

What 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

The European Union is known for its open trade policies and strong import/export relationships The EU is the world's largest importer and exporter of beerThe EU has trade agreements with various countries, facilitating trade and reducing barriers for imported goods