Heineken's global beer output in 2023 decreased by 4.7% to 24.2 billion liters mainly due to a decline from the Vietnamese and Nigerian markets.
On June 24, in a notice sent to relevant authorities, Heineken Vietnam said it had temporarily suspended operations of the Heineken Quang Nam factory. This is one of Heineken's 6 factories in Vietnam - the second-largest global market of the Dutch brewing group, after Mexico.
The reason pointed out by Heineken Vietnam is that after COVID-19, the economy in general faces many challenges when growth decelerates, leading to a decline in consumer demand. On the other hand, Decree 100 also leads to changes in consumer behavior and habits. As a result, the Vietnamese beer market has witnessed a double-digit decline in 2023 and continues to decline by single digits from the beginning of the year until now.
Therefore, Heineken said that in order to adapt to the current situation and continue to develop, the unit needs to optimize production and business activities. Heineken needs to streamline operations to continue investing and developing in the Vietnamese market.
According to Quang Nam newspaper, before COVID-19, Heineken Quang Nam brewery contributed 1,000 - 1,200 billion VND to the provincial budget each year. However, in recent years it has continuously decreased. In the first 3 months of this year alone, the contribution from this unit to the local budget was only about 20 billion VND.
In fact, this is just the last straw after a series of difficulties that Heineken has encountered in recent times. Heineken's global 2023 financial report shows that although revenue reached more than 36 billion euros, up nearly 5% over the same period, net profit only reached 2.3 billion euros, down 14%. Heineken's total yearly output decreased by 4.7% to more than 24 billion liters of beer, of which Vietnam and Nigeria markets accounted for more than 60% of this decrease.
Responding to CNBC, Mr. Dolf van den Brink, CEO of Heineken Global, admitted that the company has faced a strong decline in its key market, Vietnam.
Heineken does not announce its own business results in the Vietnamese market, but looks at the financial picture of Saigon Trading Corporation (Satra) - the unit holding 40% of shares in Heineken Brewery Company Limited Vietnam and its 40% stake in Heineken Vietnam Beer and Beverage Company Limited (Heineken Trading) can clearly see the deceleration momentum.
These two businesses play the role of producing and distributing beer products for Heineken Vietnam and each year, this joint venture regularly pours trillions of dong in dividends to Satra and has become Satra's main source of revenue for many years. last year. However, the 2023 financial report shows that profits from Satra's joint ventures and affiliates decreased by 47% over the same period last year to more than 2,700 billion VND.
The trouble in the beer industry does not only happen to Heineken as other businesses also struggle in the context of market decline, rising input prices, and tightening of Decree 100. Data from Bao Viet Securities Company (BVSC) shows that the total revenue in 2023 of the group of listed beer and wine enterprises will decrease to more than 45,000 billion VND from more than 55,000 billion VND in 2022 while the total profit after tax will decrease. decreased by 23%, down to nearly 5,100 billion VND.
However, the difficulties are reflected most clearly in Heineken as this is one of the two enterprises holding the largest beer market share in Vietnam. According to data from Ban Viet Securities, by the end of 2022, Heineken will hold 25% of the beer market share in Vietnam, led by Sabeco with 43% market share.
To stop the decline, recently, many beer and wine businesses have been forced to restructure their operations to adapt to market fluctuations. For example, Sabeco conducted "austerity" to reduce operating costs, including advertising and promotion costs. This company's 2023 consolidated financial report shows that advertising and promotion costs are 2,814 billion VND, down 254 billion VND compared to 2022.
Heineken, the Dutch beer manufacturer has launched the non-alcoholic beer product Heineken 0.0 in Vietnam. Most recently, this brand also conducted a controversial product marketing campaign right at a rest stop on the highway, in the context of authorities stepping up handling of violations against vehicle drivers. violating regulations on alcohol concentration.
However, difficulties for Heineken and other giants in the Vietnamese beer industry may not end as, according to reports from securities companies, beer businesses also face challenges from special consumption taxes.
Analysts at Vietcap Securities (VCSC) predict that beer businesses may face many difficulties in the coming time when beer consumption is weaker than expected, and costs for advertising and promotion activities are higher due to competition. fierce competition, higher input material costs, and higher special consumption tax. It is expected that beer consumption growth may slow down in the period 2026-2027 due to the special consumption tax. It can be said that these factors will contribute to making the bitter taste of Heineken beer even more bitter.
Heineken Vietnam Brewery Company Limited (Heineken Vietnam) was established in 1991 based on a joint venture with Food Technology Company (formerly a member company of Satra). In 1994, after meeting international quality standards, the Hoc Mon factory produced Heineken beer for the first time, opening the next stage of development.
In 2007, Heineken Vietnam expanded by acquiring three breweries in Da Nang, Quang Nam, and Tien Giang. In 2016, after obtaining the Vung Tau brewery, Heineken Vietnam began building a brewery advertised as the largest in Southeast Asia. By the end of 2022, Heineken's investments in Vietnam have reached 1 billion USD.
(doanhnhanvn.vn)
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