Craft brewers buck the trend, as global beer brands see sales fall
Vietnam’s alcoholic beverages industry will continue to struggle in 2024 with revenues and profits of many brands likely to decline, according to a Vietnamnet Global report on 16 January 2024.
Senior business development director of market data company Kantar Vietnam, Nguyen Phuong Nga, says that consumers are still tightening their spending and cutting expenditure on beer purchases such as wine and beer, and sharply increasing spending on more healthy beverage products instead.
Although official figures for the entire year of 2023 are yet to be released, data from the latest third quarter report indicates that most of the big alcoholic beverage businesses have not had a good business year in 2023.
According to its financial report for the 2022-2023 period, revenues of ThaiBev, the managing unit of Saigon Beer-Alcohol-Beverage Corporation (SABECO) in the Vietnamese market, reached about US$1.77 billion, down 5.7% compared to the same period in the previous year. In the first three quarters of 2023 alone, SABECO recorded a year-on-year decrease in both revenue and profit after tax of 12% and 26%, respectively.
At Hanoi Beer Alcohol and Beverage JSC (Habeco), it is a similar story. Revenue fell nearly 6.3% in the first nine months of 2023 and profits plummeted by about 39%, reaching US$237.6 million and US$12.3 million, respectively. Consumption of Vietnam Brewery’s products, a Vietnamese brewery joint venture which distributes Heineken and Tiger, also fell by 16.5%.
A significant factor in the fall of beer consumption is the ongoing effects of the disruption of the global supply chain, says Nguyen Van Viet, chairman of the Vietnam Beer Alcohol Beverage Association. This has caused the price of raw materials in the beer industry to increase by about half. “In addition, the explosion of imported beer brands in the high-end segment also affects the market share of domestic beer businesses, which are strong in the mid-range segment,” says Viet.
In contrast to the big brands that are struggling to maintain sales and margins, some small-scale domestic craft beer brands seem to be prospering, and are easily going upstream using flexible business strategies and investing in cost reductions using lean machinery, according to the Vietnamnet Global report.
Cuong Nguyen, founder and CEO of C-Brewmaster Craft Beer, a local craft brewer with operations in both the north and south of the country, says that although there are general negative impacts from the market, the company’s sales volume increased by between 7% and 8% in 2023. “In addition to quality and brand, consumers are increasingly interested in experiential culture,” says Cuong. “Craft beer products are made from local ingredients with rich flavours and colours, and have their own stories, so they easily bring emotions to customers than industrial beer products don’t.”
