Beer industry sluggish in first 8 months of the year

Mr. Tuan, a restaurant owner in Thanh Da (HCMC), said that revenue has dropped sharply in the past two years, especially after the tightening of alcohol concentration regulations. Previously, beer accounted for 35% of the restaurant’s revenue, but now it has almost disappeared, causing the restaurant’s revenue to decrease by 70%.

According to a report by iPOS – a platform providing management solutions for more than 100,000 restaurant and cafe businesses, the country has 304,700 food and beverage (F&B) stores, down nearly 4% compared to the end of last year. About 30,000 stores have closed, while the number of new openings is very limited, mainly due to reduced purchasing power, people tightening spending and new regulations.

Associate Professor Dr. Nguyen Van Viet, Chairman of the Vietnam Beer – Alcohol – Beverage Association (VBA), shared that the beer industry has been greatly affected by regulations on alcohol concentration penalties and economic difficulties. He said that in the first 8 months of the year, the industry’s output decreased by nearly 4% compared to the same period last year. This has affected budget revenue, the workforce and supporting industries such as raw material supply and logistics.

Sharing at the Fi Vietnam 2024 press conference on September 10, Ms. Ly Kim Chi – Chairman of the Ho Chi Minh City Food and Foodstuff Association, said that in the first 8 months of the year, the industrial production index of the beverage industry only increased by 0.5%, while the food industry increased more strongly, reaching 7.3%.

The reason for the sharp decline in beverage consumption, including beer, according to Ms. Ly Kim Chi – President of the Association, is due to the State’s strict control policy. At the same time, consumer habits have changed as people cut back on spending and switch to cooking at home to save money. The beverage industry is also facing high input material prices. Fragmented production processes, outdated technology and lack of linkages in the value chain make it difficult for businesses to compete and ensure product quality.

“Over the past two years, the revenue and profits of large enterprises in the industry have decreased by 6-12% each year,” said Mr. Nguyen Van Viet – Chairman of VBA. In particular, Heineken and Sabeco are the two leading units in the industry under the strongest pressure.

The financial report of Heineken Group (Netherlands) also shows that the company’s global beer output decreased by 4.7%, mainly due to the Vietnamese and Nigerian markets. In the Vietnamese market, the decline came from the difficulties of the general economy and the tightening of the alcohol concentration inflation policy. At the end of June, Heineken Vietnam stopped operating the brewery in Quang Nam. For Sabeco, profits increased again compared to the same period, but there is a risk of a sharp decrease in the last months of the year when the absolute alcohol concentration ban policy is implemented.

In addition to the two giants above, in the first half of this year, Saigon – Western Beer Joint Stock Company (WSB) saw its profit decrease by 18%, reaching only 42 billion VND. Similarly, Saigon – Phu Tho Beer Joint Stock Company (BSP) lost more than 1 billion VND, while in the same period in 2023, they made a profit of 260 million VND.

To overcome these challengesMs. Ly Kim Chi said that the industry needs to expand its business network and develop products that suit modern consumer trends. In addition, updating advanced technology is an important factor to maintain sustainable development. The Fi Vietnam 2024 exhibition in Ho Chi Minh City in October is a place for businesses to access new technology and materials, diversify materials and build supply chains.

In addition to changing trends, VBA Chairman Nguyen Van Viet suggested that the State should support policies for beer businesses. “I support the restriction of driving after drinking alcohol, but the regulations need to be adjusted to suit the traffic infrastructure conditions in Vietnam,” Mr. Viet said, adding that the beverage industry will face more difficulties and lose budget revenue if policies are not adjusted appropriately.