Vietnam’s beleaguered craft brewing sector faces more challenges as the government approves tax increases over the next six years on alcoholic drinks

Vietnam’s National Assembly has approved a sweeping increase in special consumption taxes on alcoholic beverages, raising the rate from the current 65% to 90% by 2031, as the government steps up efforts to discourage alcohol consumption and improve public health.

The measure will see taxes on beer and strong liquor climb to 70% by 2027, one year later than initially proposed, before reaching 90% in six years, according to a Reuters report.

The initial draft floated by the Ministry of Finance in 2023 had suggested a more aggressive hike to 100%, but the revised trajectory signals a compromise amid industry concerns.

The tax increase, part of a broader fiscal and public health initiative, comes as Vietnam’s alcohol industry faces mounting pressure from changing regulations and consumer behaviour.

The finance ministry said the move is intended to curb consumption of alcoholic beverages, which have been linked to rising health and social costs.

The country’s alcohol sector, led by global players such as Heineken and Carlsberg and domestic giants Sabeco and Habeco, has struggled to regain momentum following the 2019 implementation of a zero-tolerance drink-driving law. Industry revenue has declined for three consecutive years, according to the Vietnam Beer and Alcoholic Beverage Association.

The new tax regime is expected to weigh further on the sector, which has been navigating tightening margins and a shift in consumer preferences. Analysts warn the tax hike could accelerate price hikes at the retail level and reduce demand in a market once prized for its rapid volume growth.