HomeEconomyFinancial investmentBeer industry profits dropped sharply because of alcohol concentration control

Beer industry profits dropped sharply because of alcohol concentration control


The beer industry, along with commercial systems and restaurants, recorded a 20% decrease in revenue and profits in 2023, due to the alcohol concentration control policy.

The above information was shared by the Vietnam Beer - Alcohol - Beverage Association (VBA) at a conference on the afternoon of March 15. According to this association, the policy of controlling alcohol concentration is one of the reasons why beer consumption has decreased sharply, especially in restaurants and bars.

This association estimates that the beer industry will decrease 11% in revenue and 23% in pre-tax profit in 2023. Previously, in 2022, this industry also suffered a negative growth of 7%.

For example, the profits of two "giants" in the beer industry will decrease sharply in 2023. According to the business results of Saigon Beer - Alcohol - Beverage Joint Stock Corporation (Sabeco), profit after tax is about VND 4.255 billion, decreased by 23%. If excluding the peak period of the epidemic in 2021, this number has bottomed since 2016.

Similarly, last year's profit of Hanoi Beer - Alcohol - Beverage Joint Stock Corporation (Habeco) decreased by 30% compared to 2022, to 355 billion VND.

VBA believes that businesses support the policy of controlling alcohol concentration, but the absolute ban affects the production and supply chain of this industry. "Many restaurants and tourist areas are no longer able to do business without customers, leading to a decrease in labor, revenue, profits, and budget," said a VBA representative.





Mr. Nguyen Van Viet, Chairman of VBA, spoke at the conference on the afternoon of March 15. Photo: VBA

Mr. Nguyen Van Viet, Chairman of VBA, spoke at the conference on the afternoon of March 15. Image: VBA

In addition to the alcohol control policy, Mr. Nguyen Duy Hung, Vice President of VBA, said the industry is also affected by people tightening their spending after the Covid-19 epidemic. Raw material prices (malt, rice, cans) increased by 20-40%, causing production costs to escalate. This forces them to increase prices and consumers have to "bear" this increased cost.

However, according to Mr. Dau Anh Tuan, Deputy General Secretary of the Vietnam Confederation of Commerce and Industry (VCCI), the beverage industry is also affected by policy changes, such as special consumption tax.

According to the draft Law on Special Consumption Tax (amended) consulted by the Ministry of Finance last year, taxes on alcoholic beverages (beer, wine) may increase to control consumption behavior. Currently, the special consumption tax rate on beer is 65%, wine 35-65% depending on the alcohol level below or above 20 degrees.

VBA representatives said increasing taxes is necessary, but proposed a roadmap to amend the Special Consumption Tax Law from 2025 onwards to create conditions to help businesses recover.

Meanwhile, businesses petitioned the Government not to increase the special consumption tax on this item, due to concerns about significant economic damage to the industry and decline in budget revenue. Because, according to them, increasing taxes leading to price adjustments is not an effective tool to help change consumption habits.

Instead, the Government needs to have policies to encourage businesses to innovate technology, create suitable products, and bring benefits to users and the economy.

Phuong Dung




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