The Vietnamese government announced last week that it will sell all of its shares in the country’s two biggest beer companies by the end of 2017, an unprecedented move.
Bloomberg reports that the government will sell its 89.59% stake in Saigon Beer Alcohol Beverage Corp. (Sabeco) for US$1.8 billion, and its 82% share in Hanoi Beer Alcohol Beverage Corp. (Habeco) for US$404 million.
Dinh The Hien, a local economist, was quoted by Bloomberg saying that “this is the first time the government is very clear-cut in saying goodbye to major companies completely, without any stakes left.” The move is part of a long-term strategy to sell off state assets to private companies in order to fill the national coffers, but this full divestment has surprised many.
“The government’s clear-cut determination matches its long-planned strategy to speed up state stake sales,” Hien told Bloomberg. “But it also indicates how stressed the state budget is right now.” According to the International Monetary Fund, Vietnam’s debt to GDP ratio is nearing 62%, an increase of 16% over the last five years and a major source of concern.
Thanh Nien shared more specifics of the divestment, with deputy industry and trade minister Do Thang Hai explaining that Habeco’s shares will be sold this year, while Sabeco will be sold off in two tranches, one this year and the other in 2017. Danish brewer Carlsberg, who owns a 15.77% stake in Habeco, will buy a further 5.77%, while the remainder will be auctioned off.
The big prize in this move, however, is Sabeco, by far the country’s largest brewer. Bloomberg reports that major foreign players such as Thai Beverage PCL, Asahi Group Holdings Ltd. and Heineken NV are interested in the firm. Vietnam is the third-biggest beer market in Asia, following China and Japan, leaving foreign brewers eager to enter the country. Beer consumption in 2015 rose 12% over 2014, reaching 3.4 billion liters, apparently enough to fill more than 1,300 Olympic swimming pools.
[Photo via The Drinks Business]
