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Budweiser: Raising a Glass to Another New Market

Posted on: Monday, 9 June 2008, 15:00 CDT

Budweiser is set to launch in Vietnam, following Anheuser Busch's export deal with local brewer Gannon. The deal highlights Anheuser's strategy of making further investments in foreign markets, particularly in the Asia Pacific region, following weak growth in the US. This initiative should prove beneficial to the company, due to the Vietnamese market's growth potential.

Anheuser Busch's latest import and distribution deal will initially see Budweiser available in select locations in Vietnam, including upscale bars, restaurants and supermarkets in Ho Chi Minh City, as well as chain outlets across the nation. On confirming the deal, Gannon commented that Budweiser would benefit from the growing economy and large young adult population in Vietnam, which could both facilitate a boom in beer sales.

Although it is much smaller than the US market, the Vietnam beer segment is growing at a much faster rate. In 2007, the Vietnamese market was worth $2.4 billion, and was forecast to grow at a compound annual growth rate of 7.4% between 2007 and 2011. In contrast, the $78 billion US market is forecast to grow by only 1.2% in the same period, as the market reaches saturation point.

However, it is not the first time that Budweiser has entered the market. In 2004, Anheuser Busch formed a partnership with leading Vietnamese brewer Saigon Beer to "explore and discuss opportunities for further co-operation in the future". Although Anheuser never agreed upon an export deal with Saigon Beer, the previous partnership shows that the company has been interested in expanding into Vietnam for some time.

Nevertheless, the new deal raises questions about Budweiser's ability to cope with the fact that its old adversary, the Czech beer Budvar, is also available in Vietnam. Budvar was registered as a trademark in the country in 1960, under the same Budweiser name. Anheuser Busch has successfully challenged the Czech company's right to use the Budweiser brand in various countries, so could well wish to pursue the case in Vietnam as well.

Whatever strategy Anheuser decides to employ, the fact that Budweiser will soon be available in Vietnam highlights the brewer's commitment to enhancing its business outside of the US and into growing beer markets such as the Asia Pacific region.

Source: Datamonitor

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