The Vietnamese Beer Industry Faces a Challenging 2023
Statistics indicate that in 2023, the total beer consumption in Vietnam declined by more than 4% compared to the previous year, highlighting a significantly challenging year for beer and alcohol businesses in the country. Factors such as policy-related obstacles, fierce competition among industry players, escalating raw material costs, and currency fluctuations have contributed to higher input costs and dwindling demand, impacting the financial performance of beer companies.
In 2023, the Hanoi Beer-Alcohol-Beverage Joint Stock Corporation (Habeco) witnessed a decline in its business performance, with its consolidated revenue reaching 7,901 billion VND, a 7.4% decrease year-over-year. Despite this, Habeco’s revenue decline was among the lowest in the industry, with a drop significantly lower than the estimated 11% decline for the sector as per the Vietnam Beer-Alcohol-Beverage Association (VBA). It also outperformed Saigon Beer-Alcohol-Beverage Corporation (Sabeco), which reported a 12.9% revenue decrease.
Market research experts attribute the decline in the beer industry in 2023 to the overall economic slowdown. Major beer companies experienced profit and revenue losses during the initial months of the year. To gain market share, companies engaged in aggressive marketing campaigns and consumer promotions, leading to intense competition in the marketplace. Reduced consumer income significantly impacted the demand for non-essential products like beer, alcohol, and soft drinks. Additionally, the closure of karaoke establishments that did not meet fire safety standards and stricter enforcement of blood alcohol concentration limits while driving, especially during holidays, further affected the industry’s consumption patterns.
At Habeco’s recent 2024 Annual General Meeting of Shareholders, the company’s management presented a business plan that was approved by the shareholders. The plan anticipates revenue from the sale of core products to reach 6,543.4 billion VND, with a pre-tax profit of 248.8 billion VND. The conservative business plan reflects the challenging economic conditions expected to persist this year.
Specifically, the prolonged geopolitical conflict worldwide and its potential escalation continue to impact supply chains and the availability of raw materials, with prices remaining elevated and volatile. This poses challenges in forecasting, procurement, and managing raw and auxiliary materials.
On the demand side, consumer purchasing power is recovering slowly amidst economic difficulties, while strict regulations on blood alcohol concentration while driving and stringent enforcement by authorities continue to affect beer and alcohol consumption.
According to Habeco’s management, weak consumer demand and the slow recovery of the economy will continue to impact retail businesses in 2024. Inflationary risks, high operating costs, and large inventory levels remain concerns for businesses. These factors present considerable challenges for Habeco’s production and sales operations.
Habeco’s 2024 plan focuses on solidifying its leading position in the northern market while expanding its presence in central and southern Vietnam. The company aims to enhance brand value and improve the competitiveness of its products and services. It targets a 5% growth in core product revenue compared to the previous year.
Habeco will prioritize both offline (indirect consumption) and online (direct consumption) channels, as well as modern trade (MT). The company will explore the potential of e-commerce as a sales channel and seek to optimize its distribution model. It will effectively implement customer care and support initiatives to attract customers to explore and utilize new distribution channels.
Export activities are also expected to be a key focus for Habeco this year. Since early 2024, the company’s products have been officially imported into the United States through its partnership with MIB Morris International Beverage (USA). The successful export to the US, one of the world’s largest and most competitive beer markets with stringent import approval and maintenance standards, is seen as a crucial step that will pave the way for Habeco to expand its exports to other markets.
At the 2024 Annual General Meeting of Shareholders, Habeco’s shareholders commended the proactive approach taken by the company’s management in planning and executing agile solutions to overcome challenges and maintain effective production and business operations. All proposals presented at the meeting were approved with high consensus and support from the shareholders.
