The alcoholic beverage sector encountered challenges due to a decline in market share and operational realignments by companies.

DNHN - Revenues and market share will decline in 2023 as a result of decreased demand for alcoholic beverages, escalating costs of raw materials, and intense competition. Numerous companies have been compelled to substitute products, decrease prices

According to Saigon Binh Tay Beer Group Joint Stock Company's (Sabibeco) 2023 semi-annual financial report, the company's revenue for the initial half of the year was a mere 964 billion VND, representing a decline of 13% in comparison to the corresponding period of the previous year. The enterprise incurred an after-tax loss of approximately 52 billion VND, whereas it generated a profit of over 38 billion VND during the corresponding period of the previous year.

In 2023, the alcohol industry will face many difficulties when sales and market share decline due to reduced consumption demand, increased raw material prices, and fierce competition.
In 2023, the alcohol industry will face many difficulties when sales and market share decline due to reduced consumption demand, increased raw material prices, and fierce competition..

Habeco (BHN), also known as Hanoi Beer-Alcohol-Beverage Corporation, encountered a comparable circumstance. According to this company's financial report for the third quarter, the first nine months of the year generated a meager profit of 291 billion VND, a 39% decline compared to the same period in the prior year. Compared to the previous period, Habeco's net revenue decreased by 7% to 5,510 billion VND during this period.

Leaders at Habeco attribute the sales decline primarily to the escalation in the cost of raw materials. Additionally, the second-largest domestic beer manufacturer stated that consumer consumption trends are declining while competition is "ferocious."

In addition to the economic crisis, several other factors influence alcohol demand, including the trend towards restricting unhealthy products, the tightening of state management regulations, and others. job.

To endure a challenging environment, numerous alcohol enterprises have been compelled to employ any means possible to entice customers, including the production of non-alcoholic beer, price reductions, promotion increases, and more.

As per Sabeco's findings, during the initial nine months of the current year, both revenue and profit were diminished in comparison to the corresponding period last year. This decline can be attributed, in part, to stringent regulatory measures and intense market competition. Regarding road and rail traffic, administrative penalties are governed by Decree 100/2019. In the interim, there has been an increase in input costs, sales costs, and business management costs. The company attributes the lacklustre demand for beer to consumers reducing their expenditures on discretionary items. As a result, manufacturers are compelled to enhance their advertising, promotion, and discount strategies to secure and expand their market presence.

The primary factor contributing to the decline in profits for Habeco is a reduction in production. During the same period, production output was 79% and consumption output was 74.09%. Conversely, the cost of critical raw materials (malt, rice, and sugar) rose substantially, impacting expenditures and consequently impeding business profits.

Mr. Nguyen Van Viet, Chairman of the Vietnam Beer-Alcohol-Beverage Association (VBA), asserts that social distancing measures imposed in response to the COVID-19 pandemic have had a protracted effect on the beer industry, which has been further compounded by specialized management policies and Decree 100. Moreover, as a consequence of the global supply chain disruption, the cost of raw materials utilized in the beer industry has escalated significantly. The beverage industry witnessed significant setbacks in its production and business operations, as the consumption market contracted by 20% to 30%.

In response to this circumstance, the alcohol industry has implemented modifications to its operations and production methods. Certain brands have initiated the transition to low-alcohol, non-alcoholic beverages or cocktails, as well as fruit-flavored low-alcohol beer. Illustratively, Heineken's 0.0 percent alcohol beer or Chill brand (Goody Group Joint Stock Company)'s assortment of bottled fruit cocktails containing approximately 4.5 percent alcohol...

Van Nguyen Quang Duy

Related news