Tightening alcohol concentration, Saigon beer company owner says higher revenue thanks to price increase

The increase in selling price has contributed to the growth of Saigon Beer's revenue compared to the same period last year, with a better gross profit margin. However, it is accompanied by concerns about competition and declining market share.

Some units predict that the owner of Saigon Beer will stop increasing selling prices this year and in 2025 when market purchasing power is still weak - Photo: SAB

In the recently announced consolidated financial report for the third quarter of 2024, Saigon Beer - Alcohol - Beverage Corporation - Sabeco (SAB) recorded more than VND 7,737 billion in revenue, an increase of nearly 4% over the same period last year.

Sabeco's management explained that the economy improved amid strict enforcement of Decree 100 and increasingly fierce market competition.

However, net revenue was higher than the same period last year mainly due to the positive impact of price increases, Sabeco said.

In addition, according to the company, net profit this period was also higher due to higher gross profit and lower selling costs.

The financial report also shows that Sabeco's gross profit in the third quarter reached VND2,278 billion, up 2% over the same period. A series of expenses such as interest and sales were reduced.

As a result, although interest from bank deposits decreased and interest from associated companies also decreased, Sabeco still reported after-tax profit of VND1,161 billion, up nearly 8%.

In the first 9 months of this year, the owner of the Saigon Beer brand achieved net revenue of VND22,939 billion, up nearly 5% compared to the first 9 months of last year. Sabeco's after-tax profit reached VND3,504 billion, up 6.5%.

In analysis reports on the prospects for Sabeco's SAB shares, many securities companies also mentioned the upward trend in selling prices of this beer giant as well as other businesses in the same industry.

According to Phu Hung Securities (PHS) analysis team, in the context of strong fluctuations in beer consumption, the main driving force for the Vietnamese beer industry is the increase in average beer selling price, supported by improvements in product structure and increased beer product prices.

Data from Euromonitor shows that from 2016 to 2023, the average beer price in Vietnam increased by 35% and the beer price increase rate outperformed the corresponding CPI.

By 2022, due to significant increases in input costs, the beer industry had witnessed widespread price increases.

However, with increasingly fierce competition in the industry, PHS believes that the beer market will have less room to continue to increase prices directly. Instead, improving product mix will become the main driver for growth in average beer prices.

PHS experts pointed out that penetrating the premium and near-premium beer segments helps Sabeco indirectly increase the average product price, thereby maintaining profit margins.

FPTS - another securities company - pointed out that Sabeco's continuous increase in selling prices in the 2021-2023 period helped the beer segment's gross profit margin fluctuate less strongly in the context of input material prices increasing by a large margin.

However, increasing selling prices will also have a negative impact on the business's market share as competition in the beer industry becomes increasingly fierce.

Saigon Beer is about to acquire the owner of Sagota beer company

PHS said SAB is the second largest beer producer in Vietnam, accounting for about 34% of total beer consumption in the entire market.

At the same time, the acquisition of Sabibeco - owner of Sagota beer company, is expected to contribute to boosting revenue growth for SAB and increasing SAB's production capacity to 3.01 billion liters of beer/year.

Source: https://tuoitre.vn/siet-chat-nong-do-con-chu-hang-bia-sai-gon-noi-doanh-thu-cao-hon-nho-tang-gia-2024103109040722.htm