Case Study – Creating an entry strategy in a widely dispersed market
Vietnam is one of the fastest growing new economies in Asia and is a classical
example of the party ideology of communism embracing the overriding principles
of capitalism. A former French colony, Vietnam has built a very strong beer
culture and is now considered as a large and fast growing beer market in Asia .
Beer is a low value, high volume item and in Vietnam is sold at an extremely
affordable price . A pint (330 ml ) of a mainstream beer retails on the roadside at
7000 VND (Vietnamese Dong) , this is an equivalent of Rs. 15 . This very low
price , hot and humid climate, where year round temperature vacillates between
22-26 degrees Celsius has resulted in creating a “ Beer Culture “ wherein,
having a few beers on your way home is seen as part of a routine day ,
Ho Chi Min City (erstwhile Saigon City ) is in the south of Vietnam and is
regarded as the business capital of Vietnam . The thriving economy and an
adaptable western lifestyle has made it the largest composite market in Vietnam
with overall 20 % share of the total market and sales of over 4mn HL’s . ( 1 HL is
100 Litres)
The market
The market dominated by two players SABECO ( Govt controlled ) & VBL ( APB
owned ) with over 80 % share .
Some key salient features
 SABECO controls the mainstream segment with Saigon Red and
Green ( On trade ) and 333 ( off trade )
 APB’s has created a stranglehold in the top end of the market with
Heineken (Premium ) and Tiger ( Semi-premium )
 Fragmented large no of outlets – over 40000 in the city selling beer
( India has 60000 total )
 On: Off outlet split 50:50 v/s volume split 70:30
 On trade volume estimated at 2.8mn Hls ( hecto litre= 100 litres)
 Traditional emerging market structure with wholesalers controlling
the route to market (Off and On)
 On trade dominated by local traditional outlets ((Quans) – 40 % of
market )
 Off trade – has large number of convenience stores 20000 nos
whilst wholesalers also work as bulk order outlets for large
consumption occasion (weddings /parties etc ). Note should be
taken that 70 % of the annual volume is sold in a moth during
Chinese New year
Competitive position
On Trade
 VBL have approached the On trade market with a dual portfolio strategy
o Tiger is heavily promoted and used to get exclusivity contracts –
loss leader
o Heineken is used as the cash cow
o Predominantly focused at the top end of the market though lately
looking at the mainstream market with Larue ( post Fosters
acquisition )
 SABECO dominates the mainstream segment with Saigon Red and
Saigon Green – though Saigon Green has declined over the years as
consumers are switching up the pricing ladder
 VBL promotes their brands heavily with Promoter girls on a permanent
basis actively pushing the brands in contract outlets
Off Trade
 The dominant pack is Cans
 SABECO leads with 333 – which consumers believe is Saigon Red in a
can
Key Consumer Trends
 Vietnamese are traditionally conservative and non challenging . In group
situations , they tend to drink what the leader and host orders .
 If a promoter approaches them , they find it extremely difficult to say no
Market Practices
 Contracting outlets and supporting them with brand investments is a key
market acquisition tool used by VBL
 Sabeco being a government company and a very strong brand gets away
with very little investment
New Entrants
Looking at the size and the growth prospects , One of the world largest operators
decided to enter the country through a Greenfield route , As per law , it had to get
into a joint venture with a local company and planned to launch a totally new
brand .
To get a feel of the market and the way it was structured they initiated a retail
census study that mapped each and every outlet . The idea was to use this
census data effectively in building an effective distribution strategy based on the
brand being a mainstream competitive brand to Saigon Red
After two months they got data ,samples of which is captured below –
Volume In Cases:
Values in Dong
On trade Outlets
Outlet Cluster
Type Of Outlet
Upmarket Bar
No of Outlets Detailas
27 Volume Per Wk
Pricing /Bottle
Volume Share %
Mainstream Bar
35 Volume Per Wk
Pricing /Bottle
Volume Share %
Upmarket Café Bar
240 Volume Per Wk
Pricing /Bottle
Volume Share %
Night club/Disco
10 Volume Per Wk
Pricing /Bottle
Premium Outlets
Volume Share %
Asian Restaurant
179 Volume Per Wk
Pricing /Bottle
Western Restaurant
60 Volume Per Wk
Pricing /Bottle
Volume Share %
International Hotel
11 Volume Per Wk
Pricing /Bottle
Volume Share %
Cluster Total
562 Volume Per Wk
Pricing /Bottle
Volume Share %
Karaoke
452 Volume Per Wk
Pricing /Bottle
Volume Share %
Pool Bar
862 Volume Per Wk
Pricing /Bottle
Volume Share %
BBQ Outlet
67 Volume Per Wk
Pricing /Bottle
Volume Share %
Garden Resaturant
169 Volume Per Wk
Pricing /Bottle
Volume Share %
Speciality Outlets
Noodle Bar
1691 Volume Per Wk
Pricing /Bottle
Volume Share %
Vietnamese Restaurant
658 Volume Per Wk
Pricing /Bottle
Volume Share %
Local Hotels / Lodging
970 Volume Per Wk
Pricing /Bottle
Volume Share %
Cluster Total
4869 Volume Per Wk
Pricing /Bottle
Volume Share %
Mainstream Café Bar
4414 Volume Per Wk
Pricing /Bottle
Volume Share %
Open Front Drinking Outlet
4782 Volume Per Wk
Mainstream Outlets
Pricing /Bottle
Volume Share %
Cluster Total
9196 Volume Per Wk
Pricing /Bottle
Volume Share %
Street Vendors ON
664 Volume Per Wk
Pricing /Bottle
Volume Share %
Economy Eatery
3611 Volume Per Wk
Pricing /Bottle
Volume Share %
Bia Hoi Hall
589 Volume Per Wk
Pricing /Bottle
Volume Share %
Economy Outlets
Market eating
71 Volume Per Wk
Pricing /Bottle
Volume Share %
Canteens/Caterers
60 Volume Per Wk
Pricing /Bottle
Heineken
574
33685
49%
597
24682
58%
1537
18746
53%
179
26222
27%
2850
20297
960
20330
37%
297
36333
43%
6994
25757
44%
4015
13667
32%
1162
12836
19%
2930
13000
30%
5951
13000
26%
1047
12581
14%
28431
14574
34%
3330
15451
37%
46866
13587
31%
2859
13199
17%
29835
12207
18%
32693
12703
18%
151
11833
7%
11936
12353
24%
586
11878
9%
26
11667
12%
339
12316
Exhibit 1- On trade – out let /brand/volume data
Brands
Tiger
Saigon Red Saigon Green
335
30
18
29627
11167
10500
29%
3%
2%
266
16
13
20107
10000
12333
26%
2%
1%
858
223
26
16758
10310
7700
30%
8%
1%
164
18
22722
12000
25%
3%
0%
2211
933
223
16987
9757
8571
675
419
166
17723
11739
8393
26%
16%
6%
227
5
33944
18000
33%
1%
0%
4736
1644
446
22553
11853
9500
30%
10%
3%
2245
4811
1077
11231
8499
7276
18%
38%
9%
486
3187
1079
10782
7837
6749
8%
52%
17%
1962
3420
993
10595
8336
7361
20%
35%
10%
5021
7981
2844
10661
8500
7442
22%
35%
12%
568
3776
1715
10786
7697
6702
7%
49%
22%
20130
22530
7389
12044
8789
7483
24%
27%
9%
2455
1248
512
13392
8988
7966
28%
14%
6%
32867
46953
15610
11356
8378
7283
22%
31%
10%
1407
6906
2982
11216
7705
6585
9%
42%
18%
19056
70749
29715
10083
7753
6725
12%
43%
18%
20464
77655
32697
10649
7729
6655
11%
43%
18%
115
991
502
9972
7486
6506
5%
47%
24%
6095
20792
7517
10174
7696
6659
12%
43%
15%
425
2935
1656
10230
7468
6551
6%
44%
25%
22
80
45
9500
7310
6250
10%
39%
22%
112
352
89
10310
8035
6881
Others
207
Volume
/Outlet/wk
Total
1164
43
18%
133
100%
1025
29
13%
238
100%
2881
12
8%
300
100%
661
66
45%
754
100%
6971
39
384
2603
43
15%
162
100%
691
63
23%
2177
100%
15997
28
14%
353
100%
12501
28
3%
274
100%
6187
7
4%
447
100%
9752
146
5%
1334
100%
23131
137
6%
640
100%
7747
5
8%
5214
100%
83695
127
6%
1373
100%
8917
9
15%
9635
100%
151930
31
6%
2370
100%
16524
4
14%
13709
100%
163063
34
8%
16079
100%
179587
20
9%
366
100%
2124
3
17%
2574
100%
48914
14
5%
1136
100%
6738
11
17%
33
100%
205
3
16%
55
100%
947
16
Mainstream Cluster
Outlet Dispersion
No Of outlets
Balance
Type Of Outlet
Infrastructure Contract Signage Cont+sign Total Outlets
Open Front Drinking Outlet Upto Ten Tables
2
235
2 239 2274
Bet 10-20 Tables
9
440
19 468 1441
> 20 Tables
3
138
13 154
206
Total
14
813
34 861 3921
Volume/week
Average Volume/week
Total Volume /week
Total Volume /week
Total
Balance Total
Balance Total
Outlets Contract Signage Cont+sign Total
Outlets Outlets Contract Signage Cont+sign Total Outlets Outlets
2513
247
5271
9
5527 36274 41801
124
22
5 23
16
17
1909
920 25972
2496 29387 48618 78005
102
59
131 63
34
41
360
194 17165
2687 20046 23211 43257
65
124
207 130
113
120
4782
1361 48408
5192 54960 108103 163063
97
60
153 64
28
34
Exhibit 2- Mainstream cluster – data
The above data represents a further dive down into data – that captured based
on infrastructure i.e size of the outlet
Contract outlets are where companies such as VBL have got exclusivity of their
own brands
Visibility contracts are where companies pay the outlet money to show their
branding , Need not be exclusive to any brand or company
Consequently , the company used the data to do an outlet mapping and created
a matrix as given below .
Ex
High
Outlet Mapping
•Night Clubs/Discos > 60/wk
•Modern Trade /Key Accounts
• International Hotels > 60/wk
•Mainstream – Open Front
Outlet/Segment Potential
•Specialty Beer Garden
•Top End Vietnamese
/BBQ/Karaoke > 60/wk
•Noodle Bars
• Convenience Stores
•Economy Bars
• W eddings/parties etc
•Café Bars
Low
Brand /Portfolio Fit
Exhibit 3: Outlet Mapping Matrix
Questions
High
Based on the above data that is available please do the following
Assume that you are the Sales & Distribution Strategist and you have been
tasked to do the following
Groups 1& 3
1. Build a Sales & Distribution Model and Process flow that would help to
build strategy.
1. What are the key blocks you should focus on ?
2. What data do you have and what is missing ?
3. What would be the key distribution challenges for the new brand ?
Groups 2 & 4
2. Exhibit 1 indicates Outlet Mapping .
1. What are the key data fields that you would like to capture in the
mapping exercise
2. Define how each of the above data fields would help you ?
3. In your view , define the various channels as shown in the tables
and give what is the criteria that has been used by the company
Groups 5 & 8
3. Use Exhibit two to define which are the segments that you would like to
focus on and why ?
1. How many outlets need to be covered – define with your
assumptions?
2. How would you categorize the outlets –i.e ABC definition and on
what basis?
3. Based on the above define the number of field force required to
service the market and what are your assumptions in field force
coverage norms?
Groups 6 & 7
4. Use the outlet Mapping Matrix and put your key initiatives in each block ?
These initiatives should be aimed at
1. Acquisition of outlets
2. Getting volume throughput
3. Planned investment
Note :
1. Please define key assumptions- clarity in thought and well grounded
assumptions will get higher weight in the evaluation process
2. Structure in thought is key. All style & Verbosity is not desirable
3. Use logic and numbers as much as you can to build and support your
thought process
4. Presentation not to exceed 5 slides – each extra slide will result in
negative marking . Presentation time 15 minutes