SABMiller invests in high growth Vietnamese beer market

SABMiller plc has entered into a joint venture with Vietnam Dairy Products Joint Stock Company to establish a greenfield brewery in the Binh Duong province in southern Vietnam, subject to certain conditions being fulfilled.
 
Under the terms of the agreement, SABMiller and Vinamilk will each hold a 50% interest in the joint venture investment vehicle, for which the total initial investment capital will be US$ 45 million.  SABMiller's share of the investment will be settled in cash from existing resources.
 
The initial capacity of the brewery, which is expected to be operational by 2007, will be 500k hectolitres, with the ability to expand production to 1 million hectolitres. Such expansion would be funded from operating cashflows.
 
Vinamilk is a widely recognised and successful company in Vietnam, and with an estimated 70% market share in milk and related products and beverages, is the national market leader in this sector, with a strong distribution network throughout Vietnam.
 
The Vietnamese Ministry of Industry estimates that the beer market in Vietnam has grown from 13 million hectolitres in 2003 to 15 million hectolitres in 2005. The Vietnamese beer market is one of the fastest growing beer markets in the world and is considered to have favourable future prospects. The transaction reflects SABMiller's continued strategy to enter high growth developing beer markets.
 
The joint venture will initially focus on developing a Vietnamese mainstream brand which will be complemented by a premium brand from the SABMiller portfolio of international brands.  The joint venture will firstly concentrate on serving the local market in southern Vietnam, but plans to expand nationally in due course.
 
Andre Parker, SABMiller's Africa & Asia managing director, commented: "We are delighted to have reached agreement with Vinamilk to enter the high growth Vietnamese beer market. Vinamilk has an extensive distribution network, which will give us access to more than 20,000 outlets in southern Vietnam which retail beer.  We believe that the combination of both parties' expertise will result in a very successful venture".
 
Mai Kieu Lien, Vinamilk's general director, commented: "With SABMiller's experience in beer markets and Vinamilk's knowledge of Vietnam, we believe that the joint venture will be extremely successful and will make a considerable contribution to our society."