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Vietnam's beer industry in 2023: Challenges coming from various directions

The beer industry emerged in Vietnam in the late 19th century and developed from the 1990s when the state implemented economic liberalization policies.



As of 2022, Vietnam's beer consumption is at 3.8 million litres per year, accounting for 2.2% of the global market. With these results, Vietnam has become the leading country in the entire ASEAN region and ranks third in Asia (after China and Japan) in beer consumption. However, it is unlikely that this consumption level can be maintained in 2023, as the bustling buying and selling scenes of previous years, or the scarcity and price surges during Tet holidays, have disappeared. The beer industry is experiencing an unprecedented decline in consumption. The main reason is the global economy facing difficulties leading to reduced purchasing power. The government is tightening regulations on alcohol concentration for people participating in traffic. Beer production companies are also struggling with foreign exchange rates and fluctuating interest rates, leading to increased costs of production and business operations.


Vietnam is one of the major beer markets in Southeast Asia, attracting the participation of many domestic and foreign entities. However, the market is highly concentrated with the majority of market share held by 4 major brands: Sabeco, Habeco, Heineken, and Carlsberg. Through sales statistics, we also observe that products such as Saigon beer (Sabeco) and Hanoi beer (Habeco) are gradually losing ground to foreign brands such as Tiger and Heineken under Heineken Vietnam.


Heineken


Heineken Vietnam is a joint venture between Heineken and Saigon Trading Corporation (SATRA), established in 1991.


With over 3,000 employees and 6 breweries across Vietnam, Heineken Vietnam's Vung Tau brewery is the largest in the Southeast Asia region, producing 1.1 billion litres of beer annually. In Vietnam, Heineken produces and distributes brands including Heineken, Tiger, Larue, BIVINA, Bia Viet, Strongbow, and Edelweiss.


The company leads the industry in terms of net revenue and post-tax profit, with fluctuating annual net revenue. In 2020, the net revenue reached around 30 trillion VND, decreased by nearly 20% in 2021, and increased by over 50% in 2022. The post-tax profit follows a similar pattern, specifically reaching around 9 trillion VND in 2020, decreasing by nearly 30% in 2021, and increasing by over 60% in the following year.


Net revenue chart of some beer production companies from 2020 to 2022


Sabeco


Saigon Beer Alcohol Beverage Corporation (Sabeco) originated as a small brewery established by the French in 1875. 


Sabeco primarily operates in the production of beer and various types of soft drinks. Currently, Sabeco operates 26 factories with a total production capacity of over 2.2 billion litres of beer per year. Sabeco's beer products are exported to 30 countries worldwide, including Saigon Beer and 333 Beer.


The company's net revenue has fluctuated from 2020 to 2022. Specifically, it reached around 32,000 billion VND in 2020, decreased by over 5% in 2021, and increased by nearly 35% in the following year. The post-tax profits showed a similar trend to the revenue, but with more significant fluctuations. It incurred a 20% loss in 2021, which increased by 40% in 2022, reaching approximately 5,500 billion VND.


Habeco


Hanoi Beer Alcohol and Beverage Corporation, formerly known as Hommel Beer Factory built by the French in 1890.


The company mainly operates in the production and trading of beer, alcohol, and beverages. Habeco is one of the two largest beer producers in Vietnam with a total capacity of over 800 million litres of beer per year. Habeco's main consumption market is currently in the northern provinces and North Central Vietnam. It holds the third position in market share in Vietnam and the first in the Northern beer market. Hanoi Beer and Hai Duong Beer are two popular products among consumers.


The net revenue fluctuated around 7,000 billion in 2020 and 2021, increasing by over 20% in the following year. The after-tax profit has shown significant fluctuations, specifically reaching around 600 billion in 2022, decreasing by nearly 50% in 2021, and increasing by over 50% in 2022.


Carlsberg


Carlsberg is one of the first Danish multinational companies to invest in Vietnam, starting in 1993 through Carlsberg Indochina. In 2013, Carlsberg Vietnam completed its establishment, including a business company and a manufacturing plant located in the North and Central regions of Vietnam.


Carlsberg has a plant in Hue with a capacity of 360 million litres per year. Its products in Vietnam include Carlsberg, 1664 Blanc, and Huda.


The brand's revenue has increased over the years, reaching approximately 3,000 billion VND in 2020, with over 5% growth in 2021 and almost 40% growth in 2022. However, post-tax profits have tended to decrease, with a decrease of nearly 8% in 2021 and a sharp decrease of over 60% in the following year, reaching around 90 billion VND.


Sapporo


As a Japanese beer brand, Sapporo entered Vietnam in 2011, under the ownership of Sapporo Vietnam Co., Ltd.


The Sapporo Vietnam brewery is located in the Viet Hoa - Duc Hoa 3 industrial zone, Duc Hoa district, Long An province. The brewery has a maximum capacity of 150 million litres per year. Currently, it is operating at phase 1 with a designed capacity of 40 million litres per year.


The net revenue has been increasing from 2020 to 2022. Specifically, it reached around 500 billion VND in 2020, increased by over 10% in 2021, and nearly 15% in the following year. The post-tax profit has shown fluctuations, decreasing by over 80% in 2021 and then sharply increasing by nearly 300%, reaching around 120 billion VND.


Ha Long


Halong Beer and Beverage Joint Stock Company was established in 1967, originally as the Hon Gai Food Combine Plant. 


In 1992, the company officially entered the beer market. Currently, the company manages and operates 02 plants with a total capacity of 35 million litres of beer per year. 


Halong Beer's net revenue during the 2020-2022 period has grown at a rate of nearly 40%, reaching around 1,300 billion VND in 2022. The post-tax profit shows a similar trend, growing at 30% annually and reaching over 100 billion VND in 2022.


Profit after tax chart of some beer production companies from 2020 to 2022


AB Inbev


AB Inbev is owned by Anheuser-Busch Inbev Company Limited and has been established in Vietnam for over 7 years. It is a member of a multinational beer conglomerate based in Belgium.


It owns more than 500 beer brands covering 150 countries. Famous brands present in Vietnam include Budweiser, Corona, and Stella Artois. The production plant has a capacity of up to 100 million litres of beer per year and is located in Binh Duong.


The net revenue has been increasing over the years, specifically by nearly 75% in 2021, 70% in 2022, reaching around 1,300 billion VND. The post-tax profit has been fluctuating but has remained in the red for 3 consecutive years. In 2020, the loss was over 250 billion, decreasing by 36% in 2021, and increasing by over 50% in 2022.


San Miguel


The company Bia San Miguel Vietnam, formerly known as Bia Rong Vang, was established in 1994 as a joint venture between San Miguel Vietnam Ltd. and Khanh Hoa Beer Company. In 1996, the company converted its investment form in Vietnam to 100% foreign capital. With its headquarters in the Philippines, it is the first brewery in the Southeast Asia region.


The net revenue showed insignificant fluctuations during the period of 2020 - 2022, reaching approximately 250 billion VND. The after-tax profit tended to decrease, specifically by over 10% in 2021, nearly 80% in 2022, and amounted to around 4 billion VND.


Sabibeco


Established in 2005, owned by Saigon Binh Tay Beer Corporation.


It has 6 beer plants with a total production scale of over 600 million litres per year. Producing the main product line under the name Sagota.


The company's net revenue fluctuates. Specifically, it reached about 1,100 billion VND in 2020, decreased by over 20% in 2021, and increased by nearly 40% in the following year. The post-tax profit has undergone significant fluctuations, increasing by over 160% in 2021, then decreasing by nearly 170% and recording a loss of nearly 17 billion VND.


The recent visit of President Xi Jinping to promote the relationship between Vietnam and China on 12th December may potentially boost the number of Chinese tourists visiting Vietnam at the end of this year and the beginning of next year. This is expected to bring profits to the beverage industry in general, particularly the alcoholic beverage sector such as beer. However, there are still certain challenges. The Decree 100/CP on penalizing people under the influence of alcohol is expected to continue to pose a significant barrier to the beer industry this year. Additionally, the increase in production materials cost affects the industry's profits. Key ingredients such as filtering powder are expected to increase by about 25%, hops by 10%, rice by 4%, and sugar by around 8%. Especially, the price of malt, a major component in production costs, is expected to increase by about 60% compared to the average purchase price in 2022. Furthermore, the draft Law on Special Consumption Tax proposed for amendment by the Ministry of Finance also poses challenges for domestic beer enterprises if officially applied.


Source: Vietdata's 2022 beer industry market report.


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