During the Tet holiday in 2024, one of the most talked about topics on social media is “alcohol consumption.” Unlike previous years, many people have refused to drink alcohol and kept their blood alcohol levels at 0 in order to drive safely.
In fact, the zero blood alcohol content regulation when participating in traffic is not new, it has been in effect since 2020 through Decree 100, but it was only in the past 1-2 years that the enforcement of the regulation has been stricter with many alcohol testing checkpoints set up on the streets.
The decline in alcohol culture has directly affected the business results of Sabeco, one of the leading alcohol companies. According to the financial report of 2023, Sabeco’s net revenue was only 30,461 billion VND, a 13% decrease compared to the previous year and even lower than in 2016.
Previously, Sabeco’s revenue had a strong recovery in 2022, after a sharp decline in 2020 and 2021 due to the impact of the Covid-19 pandemic.
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Sabeco’s profit is also not optimistic. Although it is able to maintain over 4,000 billion VND in profit, this figure is lower than in 2016 and 23% lower compared to 2022.
According to Sabeco’s explanation, besides the strict enforcement of Decree 100, the company is also affected by intense competition, reduced consumer demand due to domestic economic recession. The company’s input and management costs have also increased while the profit share in joint ventures and associates is lower.
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The decline in business performance has greatly affected Sabeco’s stock price on the stock market. ThaiBev, remember, spent 110,000 billion VND (nearly 5 billion USD) to acquire a 53.6% stake in Sabeco at the end of 2017. With this transaction, Thaibev valued Sabeco at over 205,000 billion VND.
In fact, there was a time when Sabeco’s value exceeded this figure. However, the company’s stock price has fallen throughout 2023 and is now only around 74.4 thousand billion VND, equivalent to the bottom level since the Covid-19 pandemic emerged worldwide.
Thus, ThaiBev’s investment has lost about 64% of its value so far.
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The decline in alcohol consumption is a common trend not only in Vietnam but also worldwide. According to Forbes, the increasing trend of limiting alcohol consumption (NoLo- No and Low Alcohol) among young people has led to a sharp decrease in the demand for alcoholic beverages.
Many predictions show that the product portfolio of non-alcoholic beverages will increase by 25% from 2022 to 2026 as beer and liquor companies are forced to shift their business focus.
The world’s largest beer company, Anheuser Busch InBev, even predicts that non-alcoholic beer business will account for 1/5 of total sales by 2025. After the total market value of the non-alcoholic beverage industry exceeded 11 billion USD in 2022, more and more beer and liquor companies like Anheuser have decided to adapt their business to the market.
According to Forbes, Generation Z today consumes alcohol 20% less than the Millennial generation, and the increasing focus on health is leading to a sharp decline in alcohol consumption.
In the US, beer consumption has dropped below 200 million barrels for the first time since 1999. In 2022, for the first time, beer market share dropped to second place after liquor, something that had never happened before in the US.
Returning to Vietnam, in addition to being affected by the blood alcohol content regulation, the beer and liquor industry may face more difficulties if the Special Consumption Tax Law is amended, which includes changing the method of calculating and adjusting tax rates for alcohol and beer.
As stated in Resolution No. 115 / NQ-CP dated July 28, 2023 of the Government on the July 2023 Legal Building Session, the amendment of the Special Consumption Tax Law was proposed by building a mixed tax calculation method (tax rate in percentage and absolute tax) with alcohol and beer, instead of the relative method currently in effect. For the beer industry, the special consumption tax rate is expected to increase by at least 10% on the product price according to the recommendation of the World Health Organization (WHO), in order to limit consumption, protect public health, and regulate state revenue.
