In a recent development, the Board of Directors of Saigon Beer, Alcohol, and Beverage Joint-Stock Corporation (Sabeco, code: SAB) has approved a resolution to acquire more than 37.8 million SBB shares of Saigon Beer Binh Tay Group Joint-Stock Company (Sabibeco Group). This move amounts to a purchase of 43.2% of Sabibeco’s capital at a price of 22,000 VND per share, totaling an estimated cost of 830 billion VND.
The acquisition process is expected to take place in 2024, pending approval from the State Securities Commission of Vietnam.
Currently, Sabeco is a major shareholder in Sabibeco, holding nearly 14.4 million shares, equivalent to 16.4% of the company’s capital. If the acquisition is successful, Sabeco will increase its ownership in Sabibeco to nearly 52.2 million shares, or 59.6% of its charter capital, thereby becoming the parent company of Sabibeco. Additionally, related parties of Sabeco also hold 5.5 million SBB shares, representing 6.3% of the company’s capital.
According to Sabeco, the purpose of this acquisition is to increase its ownership in Sabibeco to expand its production and business operations.
Sabibeco, formerly known as Saigon Beer Binh Tay Joint-Stock Company, was established on November 25, 2005, with its first project being the Saigon Beer Binh Duong Brewery. Today, it operates six breweries.
Sabibeco is currently the manufacturer of several Sabeco beer brands, including Saigon Lager, Saigon Export, Saigon Special, and Saigon 333Export. It is the largest Saigon Beer manufacturer in which Sabeco does not hold a controlling stake, among several others. In 2023, revenue from sales to Sabeco reached 1,645 billion VND, accounting for 81% of Sabibeco’s revenue.
In addition to contract manufacturing, Sabibeco also produces and trades products under its own brand, including Sagota beer (Sagota Gold, Sagota Lager, Sagota Pure, and Sagota non-alcoholic) and Malty malt beverages.
Meanwhile, according to a report by FPTS Research, Sabeco is currently the second-largest beer producer in Vietnam, with a designed capacity of 2.4 billion liters per year, meeting approximately 57% of the country’s beer consumption needs.
The company operates 26 breweries across Vietnam, with an estimated total efficiency of approximately 60%. With these facilities, Sabeco’s production scale is estimated at about 2.4 billion liters per year, second only to Heineken, which has six breweries with a capacity of 2.78 billion liters per year.
Source: FPTS Research
However, FPTS Research also notes that if Sabeco successfully acquires controlling rights over Sabibeco, which has a capacity of 0.61 billion liters per year across its six breweries, Sabeco’s total capacity could increase to 3.01 billion liters per year, a 25.4% increase compared to its current capacity. This would make Sabeco the largest beer producer in Vietnam, surpassing Heineken.
According to FPTS’ data, Sabeco’s market share significantly dropped from 42% in 2018 to 33.9% in 2023 due to intense competition from foreign beer companies.
Over the years, foreign beer brands have continuously enhanced their brand recognition and offered diverse product portfolios to cater to various customer segments. Additionally, Sabeco’s need to increase output prices to compensate for rising input costs has also contributed to its market share decline. However, according to Sabeco’s leadership, the company has regained its industry-leading position in the first half of this year.
Given the slow recovery of domestic consumption and consumers’ tightened spending, some analysts believe that Sabeco could benefit from its traditional, more affordable brands. This partly explains the decision to invest hundreds of billions of VND in acquiring Sabibeco shares to expand its production and business operations, especially considering the challenges currently faced by the beer industry.
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