The lucrative potential for profits explains the avid interest and arrival of international brands in the Vietnamese marketplace over the six years running up to 2014 the study concludes.

At the end of 2014, Thai Beverage (ThaiBev), a large liquid refreshment company based out of Thailand first tendered an offer to acquire a 40% minority stake of Sabeco, the largest beer brewer and distributor in Vietnam.

According to the ‘Vietnam Beverage Report 2015’ published by VIRAC, Sabeco was the largest brewer in Vietnam commanding a 34% market share by volume and 46% by revenue.

For 2015 Sabeco reported a year-on-year increase of 28% in its net profit to US$159.5 million (VND3.6 trillion). Its revenue grew 10% for the year to US$1.2 billion (VND27.16 trillion), principally from beer sales. Meanwhile, another Thai corporation, Singha, has also signalled its interest in acquiring a controlling stake in government owned brewer Sabeco, best known for its iconic Saigon beer brand.

The Vietnam government now holds a roughly 89% stake in Sabeco, with Dutch brewer Heineken the second largest stockholder at 5% of the outstanding shares.

Sabeco last May announced plans to sell 53% of its current outstanding shares at public auction later this year, which has also garnered the attention of other well-known brewers such as Japanese Asahi and Kirin and London-based SABMiller. Along with Sabeco, a variety of other distillers in Vietnam have also been getting attention of foreign investors.

At the end of 2011, Huda Beer (Hue Beer) was acquired by Carlsberg, one of the largest foreign brewers in the Vietnam market.

The internationally recognized Danish beer brand, Carlsberg, first stepped foot in the Vietnam market in 1993 when they joined in a venture with Viet Ha Beer Company. Later, in 2007, Carlsberg acquired a 30% stake of Ha Long Beer Company and became a strategic partner of Habeco, a corporation as of 2015 holding a 19% market share of the Vietnamese beer market as the second-largest brand.

The investment of international firms will bring a lot of advantages for the domestic beer businesses including abundant financial resources and advanced technology concludes VIRAC.

However, many leading market analysts are not convinced this is a good thing and have voiced legitimate concerns that after the acquisition by foreign investors of these domestic beer brands, the profits will be taken abroad.

This is a point far too often overlooked—all of the foreign direct investment that flows into Vietnam will eventually flow back out along with the profits—for distribution to foreign shareholders and other overseas owners. When that day of reckoning comes, many touting so called benefits of foreign investment will be in for a very sobering experience, they say, and the nation may finally confront the stark reality that domestic ownership was better.

The ‘Vietnam Beverage Report 2015’ draws an all-around rosy picture about the overall liquid beverage market in Vietnam, including the beer industry. It focuses primarily on analysing the beer, soft drink and the hard liquor segments.

In addition, the report provides a forecast for the near future of the various segments and clarifies several potential threats to foreign investors. All leading producers and main suppliers in the market such as Sabeco, Habeco, Tan Hiep Phat and foreign invested companies like Coca-Cola Vietnam or PepsiCo are touched upon in the analysis.

But the report falls short when it comes to addressing issues affecting the beer industry in any substantive way say many analysts.

For example, it fails to address the need for the Vietnam government to preclude beer brewers from also distributing their own beer.

If a foreign investor is allowed to acquire a controlling stake in Sabeco later this year in a public auction, what regulations are in place to prevent that foreign brewer and distributor from also controlling which beers end up at which bars, restaurants and stores?

Without adequate regulation in place, this means that much of the interest by foreigners in acquiring Sabeco might result from the fact they could purchase an established brand while effectively, and legally, shutting out and flattening all of the other domestic and foreign competition.