Good morning, Vietnam! - Wente Brothers starts exporting wines into Vietnam

With surprising speed, one Bay Area winery has managed to carve a niche in a foreign market that was totally off limits to U.S. exports until four months ago--Vietnam. When the U.S. trade embargo against Vietnam was lifted on Februar 3, Wente Bros. of Livermore, Calif. had already laid the groundwork for a joint venture that would make their wines the first American food or beverage imports to that nation since 1975. One other American beverage exporter, Coca Cola, has already followed suit into this throbbing market.

In June, Wente Bros. hosted the first ever American Food and Wine Festival in Vietnam, at the Sofitel Metropole Hotel in Hanoi. Wente's joint venture partners, Vinalimex (Vietnam National Foodstuffs Import/Export Corporation) co-sponsored the festival, which was covered by Vietnamese television, radio an newspapers. And on June 29, Eric Wente went to Ho Chi Minh City (formerly Saigon) to hold Vietnam's first international wine seminar. The launch event wa a dinner on June 1 at the Sofitel Metropole Hotel attended by several high-ranking Vietnamese officials of the Ministries of Trade and Agriculture.

Also attending were representatives of companies from France, Australia, Canada Singapore and other nations already active in the Vietnamese market. As Tran Va Duong, marketing and planning director for Vinalimex, explained, "We want to have American wines in Vietnam because we know the quality of these wines is very good, and because they're already in Thailand, Malaysia, Singapore--so it' time for us to import them too."

Timing was a key element in the early advantage Wente Bros. has achieved in the Vietnamese market. John Schwartz, Wente's vice president of international operations, first came to Vietnam in the spring of 1992, seeking a joint ventur partner to help import their wines once the U.S. embargo was lifted. Schwartz made five more trips to Vietnam by early this year, and in February reached an agreement with Vinalimex to represent Wente's California wines on an exclusive basis for the next five years.

"We saw great potential in the Vietnamese market for three reasons," he said in an interview at the Sofitel. "First, there are 75 million people here, 60% of whom are under 25 and can't remember being at war with America. These younger Vietnamese are very consumer-oriented, and American products have an incredible fascination for them.

"Second, because of the French influence in Vietnamese culture, they are very aware of wine here and interested in trying affordable imports besides the expensive French wines they already have." (A check of the wine list at the Sofitel showed Wente selling for $19 to $25 a bottle, French wines for $40 to $50 per bottle.)

"Third, Vietnam is one of the fastest growing tourist markets in Asia." Tourism has doubled in each of the past four years.

The only other American food or beverage producer already in Vietnam is Coca Cola, though a number of others "are knocking at the door," says John Hancock, manager of the Bangkok office of the international business law firm of Baker and McKenzie. Coca Cola's joint venture was signed with Vinalimex on April 6 an involves building a bottling plant in Ha Tay Province, 10 miles from Hanoi. The ground breaking ceremony for the plant was June 29, and when it is completed in March 1995, the plant will produce 40 million liters (12.5 million cases) of cola per year. James Soo Hah, general director of Coca Cola's Indochina operations, sees unlimited potential for American consumer products in Vietnam.

"Young people in Vietnam are ready to buy American goods, because they've seen them advertised on TV from neighboring countries," states Soo Hah. "The officia average annual income is $200 per year, but in reality it's much higher," he points out, "because young people in Vietnam make a lot of money on the black market."

One other American company is poised to participate in the consumer market in Vietnam, Crown Cork and Seal Company of Los Angeles has teamed up with Swire Pacific, Ltd. of Britain to produce aluminum cans (which are currently imported from China). Their joint venture partner also is Vinalimex, which expects the Trade Ministry to approve their contract in a few weeks.

The almost instant acceptance of American consumer goods in post-embargo Vietna is evident in Hanoi, once a hotbed of anti-Americanism. At the Sofitel Metropol Hotel, during the first several days of the American Food and Wine Festival, over 85% of the diners in the hotel's Beaulieu Restaurant ordered from the California cuisine menu, including Wente wines. The winery imported their executive chef from "The Restaurant" in Livermore, Kimball Jones, to supervise the Vietnamese kitchen staff in preparing the special menu.

According to Marc Bourreli, food and beverage manager of the Sofitel, on a typical night about 1/4 of their dinner guests are Vietnamese, from the growing class of young entrepreneurs and bureaucrats involved in the expansion of trade with the West. "The market for western consumer goods here will grow rapidly," Bourreli believes, because "foreign companies here are hiring young Vietnamese workers and paying good wages by local standards--thereby improving their standard of living."

A more surprising example of the rapid success of U.S. imports in Hanoi can be seen in a random check of some of the thousands of small market stalls that lin the tree-shaded streets of this elegant capital. Right around the corner from H Chi Minh's Mausoleum, one of these stall owners, when asked if she carried any American beverages, proudly pulled a bottle of Wente's Chardonnay off one of he shelves, and smiled as she pointed to the "produced in California" label.

There are some hurdles for American companies who want to export their products to Vietnam. The Vietnamese government imposes an entry duty of 150% on all imported beer, 120% on imported wine made from grapes, and 80% on all juices, soft drinks and mineral water (although Russian wines and spirits get favorable treatment with much lower tariffs). There is also a good deal of corruption and inefficiency in the Vietnamese bureaucracy. Yet, exporters find that the high growth potential of the market here far outweighs the problems. John Schwartz points out that Wente's original goal was to sell 6,000 bottles of wine in Vietnam this year. That allotment has already been nearly filled in only four months. "We foresee continued growth and explosive opportunities in this market," says Schwartz.

Wine makers from other countries also are excited about the potential in Vietnam. Vinalimex's deputy director, Mrs. Vu Thi Bich Loc, revealed that they are conducting contract negotiations with wineries from Italy and Australia, as well as France. Roberto Ferin, vice president for international sales at the Ne York office of Banfi Vintners, was unequivocal in his assessment of the speed with which U.S. beverage exporters have entered the Vietnamese market: "This is one area where you Americans have really beaten the rest of us to the punch!"

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