Itinerary:
1. Asia Pacific Brewery/Hatay Brewery
2. Ciputra International City
Asia Pacific Brewery (APB)
Taken while walking to the brewery from the coach.
Layout of the brewery.
Our host manager for the day is Mr Duncan, and if I remember correctly, he is from Finland. He shared with us a lot about brewing beer and brought us on a tour around the factory. Unfortunately, no photos were allowed inside the factory, which I felt was the highlight of the visit.
I learnt that beer is made from wheat, rice and barley with the most important ingredient - water making up 95%. The remaining 5% is alcohol. Large amounts of water are used to brew beer as it is also used for heating and cooling.
The brewery site is 30 hectares in total and location is very important to APB. The site is 15 km from Hanoi and located next to a highway, facilitating transportation of raw material imports and distribution of beer. 50% of APB's sales is to Hanoi which has a population of 4 million, the remaining 50% is sold in the North of Vietnam.
As water is an important factor, APB has its own 60m deep wells as its water source. The water is processed by themselves and using state-of-the-art systems (reverse osmosis). This is due to the specific requirements of the water for brewing beer.
The power supply in Vietnam is not reliable and during summer there tends to be electricity shortages due to high air-con consumption. Hanoi is currently buying power from China but as safeguard, APB has on-site diesel generators as support. APB also has its own fire engines, just in case.
Each brew takes 6 hours and can produce 250 hectare litres of beer; APB produces 10 brews per day. APB also produces several brews at a time and includes Heineken, Tiger, Anchor and Bivina beer for domestic sale. There is a 5th variation which comes under Anchor beer but for export purposes. The brewing process consists of 4 steps: boiling, purification, fermentation and filtration.
Thereafter, the beer is pumped into bottles at the speed of 40,000 bottles per hour. Some of the machines used include packers, palletizers and labellers. It is then loaded into trucks for distribution.
APB is a USD63 million investment and has a total of 300 employees and they work according to shifts with 70 people per shift. Employees work for a total of 25 hours over 5 days a week. The host manager also mentioned that the equipment is only 5 years old although the buildings were completed long ago (delay due to the Asian Financial Crisis).
It was quite surprising to hear that beer in Northern Vietnam can cost as low as $0.20 which is impossible in Singapore. However, Heineken has a beer premium in HCMC thus it can be sold at a mark-up. One of the competitors is Carlsberg. There is no direct tax and local beer such as Saigon and Hanoi beer get alot of support.
APB's competitive edge is its future position, it has the strongest beer premium brand in Vietnam. Moreover, APB is a state-of-the-art brewery with efficient technology. The company is also looking towards developing its brand portfolio.
I noticed that there are alot of flowers around APB. The purpose of them is to tame down the strong smell that is produced by brewing beer. I felt that the flowers made the brewery look so much nicer!
Inside the Factory
It was interesting to see the bottling process and sky high stacks of beer cans. The machines moved the bottles around on conveyor belts which reminded me of sushi. There was some wastage though, as beer was split all around the floor.
Business Opportunities:
Mr Duncan mentioned that there is growth in beer consumption in Asia (including Vietnam) thus there are opportunities available. Despite the presence of strong competitors with established branding, the Vietnam market is huge (84 million people). Hatay Brewery managed to gain a foothold in the market due to the first-mover advantage. Brands under the brewery such as Heineken has had a long presence in Vietnam.
That said, it is at times like this where companies are still able to leverage on first-mover advantages as the market is not fully developed as yet. As compared to developed countries, the number of industries present in Vietnam are still not complete, and some are relatively new to the country. As mentioned by Casarredo, supporting industries are not readily available in Vietnam which makes it tougher to source for materials, but the situation is improving. Thus, investors will have to act fast before the supporting industries are fully developed. In conclusin, it is easier to exploit first-mover advantages in Vietnam, as compared to a developed country like Japan.
Rows of lovely houses
Extremely cosy interior
The project is a joint venture with USD2.1 billion investment capital. The Vietnamese government leased the land to Ciputra Indonesia for 50 years to create housing. Due to the rising demand for housing, the government applied to invite Ciputra Indonesia to build in Vietnam. Ciputra measures 323 hectares in total and the cost of one house is USD300,000, high-rise apartments are USD150,000 each. Interested parties need to book and a pay deposit in advance. The waiting time is approximately 6 to 7 years.
The houses are exclusive to the locals and are mostly rented to foreigners, 60% of the residents are foreigners. It is expected that 50,000 citizens will live in Ciputra in the near future. The estate is very self-contained with an international school which residents study at. Moreover, Ciputra has a big security team with 24/7 surveillance, ensuring safety within the estate.
Rental is about USD1,000 per month and foreigners can rent houses in Ciputra for up to 40 years. Houses are built with various concepts such as modern, traditional and European styles. All the furniture are imported from Indonesia.
Many of the rich Vietnamese hope to live here as it holds an international community. Locals living in Ciputra can mingle with the foreigners living there, as a form of cultural exchange which is good for their children. Ciputra organises many events during the year for residents, giving them a chance to mix around. For example, during the mid-autumn festival, Ciputra organised a big event for children.
As mentioned above, there is a rising demand for housing. Since the government personally invited Ciputra Indonesia to build housing in Vietnam, the supply shortage should be rather severe. Property investments usually churn a high profit thus investors may want to cash in on this opportunity.
Besides, Ciputra is an ideal residential area for businessmen to network. As most of the residents are expatriates and rich locals, networking with them may just give rise to unexpected opportunities.
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