Food and drink makers are producing more in Vietnam to meet the growing consumption of Vietnamese themselves. Both leading domestic producers and foreign companies are launching or are preparing to launch new factories in the country, directly or through joint ventures.
Leading Vietnamese food supplier Masan Consumer, a Masan group company, in November opened a production facility for fish sauce and instant noodles in Nghe An Province. The new factory was built for $56.4 million and is the company's first in central Vietnam -- its other factories are in the south. When the new factory goes fully onstream, Masan will be able to cut logistics costs by $18 million over the next 10 years.
Taiwan's leading food maker Ve Wong and Vietnamese sweets maker Kinh Do launched a joint partnership in May, and are preparing to open four factories in Vietnam. The partnership plans initially to spend $30 million on a new factory for instant noodles and seasonings by next autumn in the northern province of Bac Ninh. The three other sites will be located in southern provinces.
Anheuser-Busch InBev of Belgium, the world's largest brewer, opened its first factory in Vietnam in May. Budweiser, one of its beer brands, is becoming more popular in Vietnam. The company hopes to expand the brand's market share further by producing the beer locally. The new factory in the southern province of Binh Duong is capable of making 100 million liters of beer per year.
Saigon Beer Alcohol Beverage, commonly known as Sabeco, is spending 620 billion dong ($27.5 million) to build a new brewery. The new production site, located on a 60,000-sq.-meter plot of land in the southern province of Khanh Hoa, is set to open in spring 2017 with an annual production capacity of 50 million liters.
Ready and steady
Vietnam has a population of 93 million, and the average age is 28. While labor costs in the country have surged, the country's inflation rates have hovered at 1% or below this year. High inflation rates had been a concern in the country, but stable prices have begun boosting purchases, mainly among the middle class.
"For the time being, domestic food and beverage markets will see stable growth at 7-8%," said Nguyen Van Viet, chairman of the Vietnam Beer, Alcohol and Beverage Association.
The Association of Southeast Asian Nations is to launch the ASEAN Economic Community on Dec. 31. Consequently, tariffs within the bloc will be entirely removed by the end of 2017. Vietnam has drawn high expectation as a promising consumer market for businesses from Western countries, Japan, Thailand, and other countries that have production facilities in the Southeast Asian bloc.
Source: http://asia.nikkei.com
Key words: Factories, popping up, to meet appetite of Vietnamese
