Heineken Vietnam Brewery Limited Company has reported to the People’s Committee of Quang Nam province that they will be temporarily halting production at their Quang Nam factory due to a decrease in consumption post-COVID-19 and Decree 100 on alcohol control.
This reduction in consumption is evident not only through offline channels but also on e-commerce platforms, where the brand’s sales have taken a hit.
Online Channel Witnessing a Significant Drop in Sales
According to Metric, a leading e-commerce data company, there have been over 60,274 successful deliveries of Heineken orders from 194 stores across three major e-commerce platforms: Shopee, Lazada, and Tiki. However, in the first five months of this year, the brand’s revenue on these channels amounted to just under VND 32 billion, a 60% decrease compared to the same period last year.
A Metric representative stated that the downward revenue trend has been observed since the beginning of the year. Following the amended Decree 100 on minimum alcohol content levels, beer consumption during the 2024 Tet holiday increased but was still significantly lower compared to 2023.
Shopee continues to dominate Heineken’s revenue, accounting for 63%, followed by Lazada and Tiki with 31% and 2%, respectively.
On Lazada, the brand has established an official store with over 71,000 followers and frequently offers vouchers to stimulate consumption. The discounts on this platform are substantial, ranging from 30% for Tiger and Heineken Silver beer cases.
Heineken’s Shopee Mall store, established three years ago, currently offers 73 products and boasts a following of almost 161,000. Tiger, Heineken Silver, and traditional beer cans lead the sales charts with tens of thousands of units sold. However, new products like non-alcoholic beer have seen limited success.
Challenges Abound
The challenges are not limited to the online channel, as traditional channels such as restaurants and dealers are also struggling to sell alcoholic beverages.
“Many restaurants and tourist areas have seen a decline in visitors, which has impacted labor, revenue, profits, and tax contributions,” said a representative of the Vietnam Beer, Alcohol, and Beverage Association (VBA)
The beer industry as a whole witnessed an 11% drop in revenue and a 23% decline in pre-tax profits in 2023. The year before, in 2022, the industry experienced a 7% negative growth rate, according to VBA statistics.
Satra, a joint venture partner of Heineken Vietnam, reported consolidated revenue of VND 9,791 billion in 2023, a 17% increase from 2022. However, gross profit decreased by 25% to VND 1,069 billion.
Profit from the joint venture decreased by nearly VND 2,400 billion, or 47%, to VND 2,734 billion. The profit recorded from this joint venture is largely dependent on the profit of Heineken in Vietnam.
Satra currently holds a 40% stake in Heineken Vietnam Brewery Limited Company and a 40% stake in Heineken Vietnam Brewery and Beverage Company (Heineken Trading). The remaining shares are held by Heineken’s subsidiaries in Singapore and Australia.
Heineken’s global report also indicated a 4.7% decline in beer volume, mainly due to the Vietnamese and Nigerian markets. Additionally, the decline in the Vietnamese market significantly impacted the company’s operating profit in the Asia-Pacific region.
The Heineken joint venture in Vietnam, established in 1991, now operates six factories and employs over 3,000 people. The company produces and distributes well-known brands such as Heineken, Tiger, Larue, Bia Viet, and Strongbow in the country.
Thao Van
Dancing in the Rain: Sabeco’s CEO Embraces Adversity
At its 2024 Annual General Meeting of Shareholders held on the morning of April 25, Saigon Beer – Alcohol – Beverage Corporation (Sabeco, HOSE: SAB) set a profit growth target despite concerns about obstacles from Decree 100. However, Sabeco still believes that 2024 will bring golden opportunities.
