Marketing plan for SaiGon special brand of SABECO in VietNam

EXECUTIVE SUMMARY Saigon Beer-Alcohol-Beverage Joint Stock Corporation SABECO has been the well- known and familiar name on beer market for more than 35 years with the first product, Sa

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HO CHI MINH CITY OPEN UNIVERSITY

UNIVERSITEU LIBRE DE BRUXELLES SOLVAY BRUSSELS SCHOOL ECONOMICS & MANAGEMENT MMA7

Author: DO MINH TRUNG VAN HOAI THU

MARKETING PLAN FOR SAIGON SPECIAL BRAND OF SABECO IN VIETNAM

MASTER PROJECT MASTER IN MARKETING AND ADVERTISING

HO CHI MINH CITY

(2014)

COMMITMENTS

We, Do Minh Trung and Van Hoai Thu commit that we have done this project by ourselves based on the information collected either from The public’s or SABECO’s sources

This paper is designed only for the academic purpose of the completion of our Master in Marketing and Advertising It is not expected for any other uses

……… ………

ACKNOWLEDGEMENTS

This final project was completed with the guidance of Mr Le Minh Duc, thank you very much for your time and enthusiasm to give us comment and direction Take this opportunity, we would like to send our special thanks to family, our colleagues and friends for support and dedicated to help we complete this project The result and the feasibility of this project in reality are motivating us for knowledge that we gain during the course

TABLE OF CONTENTS

COMMITMENTS 1

ACKNOWLEDGEMENTS 2

EXECUTIVE SUMMARY 4

LIST OF ABBREVIATIONS 5

INTRODUCTION 6

I Company Overview 7

1 Vision 7

2 Mission 7

3 History of SABECO 7

II Market overview 10

III SABECO and Saigon Special Brand 15

1 SABECO (Saigon Beer – Alcohol – Beverage Corporation) 15

2 Saigon Special Brand 16

2.1 Brand characteristics 16

a Target segment 16

b Positioning 16

c Differentiation 16

d Saigon Special brand - SWOT matrix 17

2.2 Competition 18

2.3 Analyze of the Marketing Mix Strategy of Saigon Special 19

2.3.1 Product 20

2.3.2 Pricing 20

2.3.3 Place 23

2.3.4 Promotion 26

 Pull Strategy 26

 Push Strategy 26

4 Marketing activities in 2012 28

5 Achievements 31

5.1 Internal data reflecting on consumption 31

5.2 External data from market research companies 31

IV Recommendations and Implementation plan for 2014 34

2.1 Objective 36

2.2 Goal 36

SAIGON SPECIAL - MARKETING PLAN 2014 41

RUNNING TIME FOR THE 2014 PLAN 42

References: 43

EXECUTIVE SUMMARY

Saigon Beer-Alcohol-Beverage Joint Stock Corporation (SABECO) has

been the well- known and familiar name on beer market for more than 35 years with the first product, Saigon Export, and later on they developed Saigon 333, Saigon Lager and lately in 2000 Saigon Special There are many internal and external forces that influence SABECO strategies on their developing way The success of the Saigon Beer during the pass time has been relied on a lot of factors, but it can be said that the most importance in those is the effective marketing strategy has been applied by SABECO This project was written after reviewing and analyzing the Vietnamese beer market which has been grown stably and rapidly for recent years The beer industry is expected to post an annual volume growth rate of 13% 2011-15 and 8% 2016-25 The overall objective of this project was to evaluate the market potential of SABECO in term of analyzing SWOT matrix Saigon Special is a new brand of SABECO that is aiming at the target segment of people who tend to drink premium beer Although at present SABECO is the leading beer producer with the market share accounting for 34% in 2012

not so successful because SABECO lacked of an effective marketing plan especially focusing on promotion activities for this new brand

By analyzing SWOT matrix an marketing mix of Saigon Special brand, some weaknesses of promotion strategy are identified such as: on the way to build up the brand awareness, Saigon Special did not do much as special

as its name in order to outstanding of its relative, some marketing activities

of Saigon Special still put on the shoes of SABECO Saigon Special is nearly loose awareness of consumer in the premium segment, because the lack of investment into the marketing activities especially focusing on promotion

In exploring the weakness point of the product, Saigon Special, we have given some recommendations to grow market share and market size by investment into sales, marketing and PR activities, prioritize promotion activities to create the customer need

1/ For the pull strategy: Increase brand awareness (for short term) and setting a strong brand identity and Trade mark (for long term)

2/ For the push strategy: Strongly invest for retailer in terms of point of sales material (POSM), display (for short term) and invest on distribution system

in both policy and display, especially at point of sales (for long term)

LIST OF ABBREVIATIONS

- BMI: Business Monitor International ;

- APB: Asia Pacific Breweries Limited;

- VBA: Vietnam Beverage Association

INTRODUCTION

Beer has been a popular and favorite drink for a long time It is considered

for the males Beer is not only a refreshment drink, but it has also been considered as an intestinal excitation supporter Beer can help to reduce the blood pressure and prevent the eye kernel from blur The moderate drinking

of beer is good for health and help to lengthen the life Therefore the beer volume has continuously increased all over the world in general and in Vietnam in particular In 2013, there are some prosperous signals in Vietnamese economy but still many difficulties still remain A lot of industries face a big loss However, in such situation, the domestic beer industry has been seen as a bright mark with the annual increase of 10% and volume reached around three billion of liters in 2013 The market research organization Eurowatch has published the statistic number that averagely, each Vietnamese person consumes thirty two liters of beer per a year Vietnam is the leading beer drinker in Asean area and ranks third in the Asia, after China and Japan

Seizing and understanding the market needs, the Saigon Beverage Joint Stock Corporation (SABECO) has been the well- known and familiar name for the domestic customers After 35 years having appeared

are Saigon Lager (or Green Saigon- Sài Gòn Xanh), Saigon Export (Red

has its specific characteristics but they share the same intimate distinguished taste The success of the Saigon Beer during the 35 years has been relied on a lot of factors, but it can be said that the most importance in those is the effective marketing strategy has been applied by SABECO In addition, the new business concepts have been ceaselessly improved They are the strategies to develop the brands of SABECO and enhance the name

of Saigon Beer to a new high level not only in Vietnam, but also stretch out

in the world

With the slogan “The yeast of success”, Saigon Special has more and more affirmed its position and brand in the mind of the customers at the middle and high income classes In this paper, we have analyzed the marketing and advertisement activities of Saigon Beer brands in general and Saigon Special in particular to give the solutions and suggestions which will help Saigon Special more developed and firmly positioned at the beer segment for the customers at the middle and high income classes in the society in the situation of the fierce competition with the big brand names like Heineken, Saporo, … Our solutions also contribute to the firmly keeping of the number 1 of SABECO in the beer production and consumption in the domestic market

I Company Overview

1 Vision

"To make the products of SABECO group become the top selected drinks in Vietnam, have stable position in terms of brand awareness and reputation regionally and internationally."

3 History of SABECO

leading firm in Beer industry with about 90% of state - owned shares After over 100 years of construction and development, SABECO is now Vietnam’s largest enterprises in the manufacturing field and beer industry Owning Vietnam first class beer brands namely: Saigon Beer, Beer 333 , SABECO has target customers at the age of 25-45 (core 30-40), socio -

for the average income class or to those who love traditional taste and feeling

For many years, SABECO got the annual growth rate over 20%, far exceeding the average growth rate of 15% of the industry However, in

2011, SABECO total output was about 1,200 million litters, a year -on -year increase of 10% This was the first year SABECO got the growth rate which was only equal to the industry average (10%, according to MOIT report) It

is obviously that beside the impressive growth in many aspects, SABECO is losing market share to the competitors SABECO leading team is now finding ways to increase sales and quantity, including: restructuring all Beer Brands, rebuilding SABECO identity system, penetrating new markets such

as the North market, high class market

Period 1977 - 1988  01/06/1977: Southern Wine Beer Company official

reception and management Brewery Cholon from BGI Company and formed Saigon Brewery;

 United Enterprise 1981: Alcohol Beverages II was converted from Southern Wine Beer Company;

 Saigon Brewery in 1988 became a subsidiary under United Enterprise Alcohol Beverages II

- Mineral Water Plant DaKai;

- Joint Venture Carnaud METALBOX Saigon;

- Joint Venture Malaya Vietnam Glass for producing glass bottle

- Phu Yen Brewery;

- Phu Tho Brewery

Period 1999 - 2002  2000 Quality Management System by BVQI - ISO

9002:1994;

 2001 Quality Management System by BVQI - ISO 9001:2000;

associated with Saigon Beer members:

- 2001 Beer Company Soc Trang;

- Henninger Brewery;

- Huong Sen Brewery;

- 2002 Joint Venture Beer Can Tho Company;

- Brewery Ha Tinh

 Established depot in Nha Trang , Da Nang and Can Tho

NGK SABECO based Beer Company Saison and

receiving new members :

- Binh Tay Wine Company;

- Chuong Duong Beverages Company;

- Glass Factory in Phu Tho

- Trading and Servicing Beer - Alcohol - NGK Saigon Company

 2004: Corporation Beer - Alcohol - NGK SABECO moved to organization and operation as a parent - subsidiary model following by the 37/2004/QD-BCN of the Minister of Industry;

 2006: Completed a delivery system across the country with 8 regional subsidiaries of SABECO;

 2007: Beer - Alcohol - NGK SABECO corporation continuously grew rapidly with the mainstream products, and new investments in various fields and products;

 Currently Beer - Alcohol - NGK SABECO Corporation has total 28 members

(Source: www.SABECO.com.vn)

Figure 1-1: Several beer brands manufactured by SABECO

(Source:

http://hcm.24h.com.vn/thi-truong-tieu-dung/suc-hut-cua-thuong-hieu-bia-viet-c52a507517.html)

II Market overview

In recent years, the Vietnamese beer market has made a rapid and stable growth According to 2011 survey by major Japanese brewer Kirin Holdings

Co, Vietnam, with a large population getting wealthier; no religious prohibitions against alcohol, a number of highly competitive foreign and state-owned breweries aggressively competing for market share is extremely bright market for beer and alcohol drinks In 2011, Vietnam was among the top 25 beer-consuming nations in the world It is estimated that one third of Vietnam's population of 90 million consumes beer Total consumption continues to increase with strong growth at just fewer than 10%, driven by strong economic growth and spending power, aggressive competition and expansion of foreign investment and state-owned breweries In 2009, the Ministry of Industry and Trade (MoIT) approved a master plan to develop the domestic alcohol, brewery and beverage industry to 2015 and beyond Under the plan, the industry is expected to post an annual volume growth rate of 13% 2011-15 and 8% 2016-25

(Sources: Kirin, APB, Habeco, VBA) Note for the figure:

* – Estimate – Vietnam’s Ministry of Industry & Trade growth plan for the beverages sector 2009

# – Estimate – Vietnam’s Ministry of Industry & Trade forecast – reported 19/1/12

In 2012, Vietnam beer market volume was the third biggest in Asia, after China and Japan, up from 8th position in 2004 98% volume share of the total official alcoholic drinks industry in Vietnam belonged to beer The beer

market has a historical growth rate of 9 – 11% & forecast to grow at 12 –

40 years old) forecast to grow by 5%, equivalent to 1.7 million additional consumers, by 2015 According to Euro monitor International, Vietnam retail beer sales probably rose 20% to 96 trillion dong (US$4.6 billion) in 2012 The average beer consumption of Vietnam was about 27.53 litter/capita/year in 2010 and 30 litter/capita/year in 2011 (according to MoIT) Those figures were also still well below other Asian countries, such

as South Korea (37 litters/capita/year), Japan (47 litters/capita/year) and China (33 litters/capita/year) in 2011

(Sources: Kirin, APB, Habeco, VBA)

In 2012, Vietnamese people drank more beer during the economic downturn Revenues of two major brewers in the country, Hanoi Beer and

Corporation (SABECO), increased attractively In the first half of 2012, Habeco reported revenues of VND 770.9 billion (US$37 million), a 28.2% year-on-year increase The company sold 30.6 million liters of canned beer,

up 72 % over the same period previous year; and 17.3 million liters of draught beer, up 27.5 % It earned profits of more than VND 2,550 billion,

an increase of 10.3 % Meanwhile, Habeco profit increased 9% over last year

Although the growth rate was strong, the per capita volume consumption in Vietnam was still not particularly high, at just about a third of the US, consequently leaving room for further growth In terms of a regional

comparison, beer consumption per capita in Vietnam was also still well below other Asian countries, such as South Korea, Japan and China

Figure 1 - 5: Asian Annual Beer Consumption per capital (litter)

Despite the growing presence of multinationals in the market, local firms still dominate The sector remained highly-regionalized, Habeco (Hanoi Alcohol Beer and Beverage Company) has been dominating the north of the country and SABECO (Saigon Beer Alcohol Beverage Corporation) has been controlling in the south SABECO and Habeco are gaining an impressive 34% and 19% of the local beer market respectively It is not surprising, therefore, that domestic brands are continuing to lead overall sales in the Vietnamese beer market

The market dominance of domestic brewers remains a major obstacle for foreign brewers to tap into the sector’s potential However, on the flip side, the dominance of domestic beer producers in their respective regions emphasizes the less-competitive nature of the regional beer markets and partly explains the sector’s higher-margin operating environment With growing consumer awareness and receptiveness of foreign brands, there is

certainly potential for foreign brewers to make big waves across the sector

Figure 1 -6: Vietnam beer sales (Source: BMI, Q3-2013, Vietnam food & drink report)

Figure 1 - 7: Existing beer brands in Vietnam (Source: collected by writer from Internet)

0 50,000,000

Vietnam beer market SWOT analysis:

The young and affluent

Vietnamese consumers, are

interested in brands;

therefore well-known

Western products supported

by huge investment in

marketing and promotions

tend to have highly

successful launches

Alcoholic drinks are widely

consumed and have gained

popularity in current years

With GDP growth averaging

7.1% annually between 2000

and 2011, Vietnam has been

one of the fastest-growing

economies in Asia in recent

years

Accession to the WTO, in January 2007, will continue to benefit Vietnamese

exporters, with the continuing removal of market barriers and trade restrictions set to increase competition

A growing tourism sector is fuelling interest in

convenience categories, in addition to sub-sectors such

as soft and alcoholic drinks With consumers' rising incomes, there are opportunities for premium-branded products

There are wide income gaps

between urban and rural

areas, and local consumption

patterns vary significantly

according to income

Vietnam's infrastructure is still

weak (transportation)

Establishing separate

breweries in different regions

is costly but remains one of

the best strategies to

overcome the lack of

be passed on to consumers

III SABECO and Saigon Special Brand

According to a research of SABECO in 2010, within 36 biggest cities in Vietnam, there were 4 SKUs of this beverage company on the list top ten most popular beer SKUs They were Saigon Special, Saigon Lager, 333, and Saigon Export with 1.5%, 5.5%, 16%, and 23.1% of volume share equivalent In total 2010 and 2011, SABECO dominated the market with 45.4% and 47.5% equivalent in volume share

(Source: Internal data from SABECO)

Figure 3 – 2: Vietnam beer market share

(Source: 2011, Euromonitor)

2 Saigon Special Brand

2.1 Brand characteristics

a Target segment

- Vietnamese urban areas;

- People who tend to drink premium beer;

- White collar;

- Middle income to high income people

b Positioning

- Premium beer for: young, dynamic, and successful business people;

- The first Vietnamese beer claiming is a premium beer

c Differentiation

The first Vietnamese beer claiming is a premium beer

d Saigon Special brand - SWOT matrix

Endorsement by strong

corporate brand;

Wide distribution channels;

Loyal employees  stable

quality

Vietnamese beer consumption has been increasing despite of the economic downturn;

Demanding of premium beer raise up;

Young and affluent customers are willing to try new products from high reputation corporations;

Vietnam has a young population which is average

28 years old which can increase market size;

A potential multinational corporation partnership would take advantage on

management style, technology, etc for the brand development

Weak brand identity;

Inconsistent from creating

Saigon special brand

2.2 Competition

Tiger, Tiger light, Tiger Crystal…

Saigon Laser, Ben Thanh …

Direct competitors: Heineken and Sapporo

 Heineken

P1: Product

Heineken is a Pilsner beer and it is

produced under the higher quality

standards and using only natural

ingredients, which makes it light, mild and

easy to drink

- Ingredients: No Additives; No

Preservatives; No Fat; Vitamins B 1, 3

and 11; Minerals ; Antioxidants, malts

- Can in pack: 391.000 VND/24 cans

- STR bottle: 55.000 VND/bottle (only bought in bars and luxury

restaurants) Heineken is setting up the selling price higher than the others; targets to the customers who have high income, are successful and confident

P3: Place

diversified and very easy-to-buy,

customers can buy its products

anywhere, from a wholesaler to the

retailer, through 2 typical distribution

channels: traditional and modern

channels

• GT: bars, pubs, clubs, HoReCa

• MT: supermarkets, convenience

stores

- Distribution Channel Models:

1/ Producer  Retailers  Consumers

2/ Producer  Wholesalers  Retailers 

Consumers

P4: Promotion

Pull Strategy

PR activities: advertising clips,

impressive TVC, events (Heineken

night with dance music events at

Dana Beach Club (Da Nang) and Nexttop Club (Hanoi); Heineken Countdown Party; “Crack the case”

Push Strategy

- Sales Promotion

- Sponsors for sport tournaments

- SCR activities: Enjoy Heineken Responsibly (EHR) Campaign

- PGs at bars and restaurants

confident

P3: Place

- GT channel;

Horeca: restaurant, bar, pub,

club, street restaurant …

- MT channel;

P4: Promotion

Pull Strategy

- TVC; print ad; billboard; press;

Push Strategy

- In store sampling; promotion (by

a small carton will have a luxury glass); POSM; PGs at

restaurants; CSR (Full Scholarships for selected

students)

2.3 Analyze of the Marketing Mix Strategy of Saigon Special

In any business market, the brand has always been the core factor determining the success of the business Building a strong brand positioned firmly in the minds of customers is a difficult problem and surely it is not an easy task, especially in the context of Vietnamese beer market when more and more famous beer brands of the world appear (currently there are over

30 international brands of beer available in Vietnam)

consumption volume in 2013 reaching 1,310 billion liters (26.5% higher in comparison of those in the same period) - SABECO company is confident in positioning their brand by adopting the appropriate marketing mix strategy which is the key to implement strategic positioning, contribute to the unique and distinctive beer namely SAIGON SPECIAL

2.3.1 Product

a Quality

Saigon Special beer products with 100% malt ingredients (no rice), are produced on the most advanced technological line in the region and fermented by a traditional technology for a long time to create a delicious and original flavor different from the other beer on the market Besides, SABECO is also successful in applying the core components into their products Compounds of beer with ingredients extracted from houblon plant (hops) have anti-clotting effects, prevent cancer, and reduce the growth rate

of heart disease and cancer

Basic Manufacturing standard TCCS 4: 2008

- Bottles of Special Beer have been produced and widely distributed throughout the country, especially in the big cities such as Ho Chi Minh City, Hanoi, Da Nang, Can Tho, Nha Trang

- Saigon Special is a special type of beer specializing for youthful, dynamic and successful consumers

- Saigon Beer Products do not cause hydrophilic and headaches after drinking

2.3.2 Pricing

In the context of the fluctuational and changable Vietnamese economy and regions, higher inflation leads to the rise of the price of raw materials since

2008, all the price of the beer products has been raised as well, not only

market Although applicable measures to control rising production costs have been implemented, but due to the high input costs, selling price of Saigon Beer has been increased since 2008 until now

The pricing of the product has been applied according to the valuation method based on costs Costs account for about 75% of the total net price,

this number tends to be increased more and more because of the sharply

higher raw material prices in comparison to other factors

From the fact that the selling price influenced by the price and cost of raw

materials such as malt, rice, water, hops, , With many options analyzed

for choosing the best final price, SABECO has fixed the price as the table

below, this price also has applied the discounts and concessions as before

Prices are applied according to the process: the product has been

manufactured, distributed from affiliate companies to distributors, then to

the agents and to the end users finally

Table 3 - 2: Selling Price of SABECO Beer in the First Quarter of 2013

(Price unit: VND)

SABECO

333 ( 24 cans in pack) 330 186.000 213.900 Saigon Export ( 24 bottles in case) 450 160.000 184.000 Saigon Lager ( 24 bottles in case) 450 145.000 166.750 Saigon Special ( 24 cans in pack) 330 258.400 304.000 Saigon Special ( 24 bottles in case) 330 185.000 212.750

VIETNAM

BREWERY

LTD (VBL)

Heineken (bottle) 330 282.000 324.300 Heineken (can) 330 340.000 391.000 Tiger (12 big bottles in case) 640 115.000 132.250

Samiguel ( 24 cans in pack) 330 187.000 215.050

(Source: Real survey)