Page 34 - Layout 1

BUSINESS REPORT

2019. Production began to recover in May,
by 60 per cent compared to the February-
April period. Accumulated output in the first
half, according to the General Statistics Office,
was down 17 per cent year-on-year. The
second quarter was the worst for the beer
industry, due to the social distancing measures
introduced in the first three weeks of April.
Beverage businesses suspended operations
from mid-March to early June. Non-essential
businesses in high-risk localities were asked
to suspend operations once more when the
second Covid-19 outbreak struck in July.

A way forward
In the difficult days of the first half of last
year, Sabeco made efforts to maintain stable
production and business by efficiently using
its budget and cutting unnecessary costs. It
PHOTO: VIET TUAN
took advantage of the relative downtime to
Glass half full systematize its processes and improve employee
skills and competitiveness. The brewer also
changed its sales approach to match changing
trends, such as investing in online sales and
2020 was a problematic year for Vietnam’s beer market given conducting promotional programs. It will con-
the pandemic and legal changes on drink-driving, but some signs tinue to expand its breweries this year and
of recovery are clearly evident. improve their infrastructure, in particular with
a brewery in central Quang Ngai province.
T TRA MY & LAN KHANH REPORT
The focus will also be on research and devel-
opment (R&D) activities and investing more
in technology via its Sabeco 4.0 project.
n the context of Covid-19 and changes Chairman of the Vietnam Beer-Alcohol-Bev- Amid the pandemic, beer brands overall
to the law on driving while intoxicated, erage Association (VBA), was quoted as saying. were actually quite active last year, with many
I Vietnam’s beer market had to tackle a A major player in Vietnam’s beer market, new products being launched. Heineken
host of issues last year, but Sabeco, for one, Sabeco said revenue in the first half of 2020 introduced Heineken 0.0 in Vietnam, as a
saw better days in the first quarter of 2021. was significantly affected by the twin impacts quick response to Decree No. 100. Brewers
According to a report from SSI Research of Covid-19 and Decree No. 100. While the also strengthened their presence in all seg-
released in January, the brewer is expected Decree is a major challenge, the brewer finds ments, with Sabeco introducing Saigon Chill
to post an increase in revenue of 22.1 per it difficult to separate its impact on business in the high-end segment in October and Lac
cent for the year, with average sales prices from the impact other difficulties have created, Viet in the affordable segment in June, while
rising 2 per cent due to changes in product especially the pandemic. But they understand Heineken introduced Dai Viet in April to
structure. Despite the many challenges, major and appreciate the government’s thinking compete in the cheaper segment.
players in the beer market have adopted plans behind the Decree. The report from SSI Research noted that
to take on both issues. Sabeco told VET that The Ministry of Industry and Trade (MoIT), Covid-19 changed the industry’s sales struc-
the early reopening of Vietnam’s economy - meanwhile, announced a decline of 17.4 per ture, with rising sales through off-trade chan-
in large part due to decisive action by the cent in the index of industrial production nels like retail outlets such as hypermarkets,
government to control its spread - has greatly (IIP) in the beer market in the first half of supermarkets, convenience stores, mini-
contributed to the nascent recovery. 2020. According to a survey from Vietnam marts, and wine and spirit shops.
Report, customer demand for beer and alco- Of note, the market witnessed positive
Tough year holic drinks declined the most in the beverage signs in the high-end beer segment, with
Decree No. 100/2019/ND-CP, which took sector, with 63.7 per cent of survey respondents growth of 15 per cent per year, according to
effect on January 1, 2020 and contained pro- saying they cut their monthly spending on the VBA. Considered to hold substantial
visions on penalties for road and rail offenses such drinks. Beverage producers were there- potential, the segment continues to receive
relating to alcohol consumption, joined Covid- fore the hardest hit in the food and beverage investment from giants such as VBL, the
19 in putting a lot of pressure on the market. (F&B) sector, with 83 per cent of surveyed owner of Heineken and Tiger, AB-Inbev, with
Experts said the Decree was a stern move, as companies saying they were either affected Budweiser and Beck, and Carlsberg and Sap-
alcoholic drinks in general and beer in par- or seriously affected by Covid-19. poro. “As consumer demand and the economy
ticular are mostly consumed on-site in Vietnam In another report, Nielsen confirmed that have developed, beer has moved from being
rather than in the home. The heavy penalties breweries were the worst affected by Covid- a luxury item to a popular drink,” Mr. Viet
discouraged many beer drinkers from imbibing 19. Beer production fell 12.7 per cent in Feb- said. “When quality is higher, a product
and resulted in falling consumption numbers. ruary, 2020; the steepest decline in the fast- becomes more popular, so greater demand
Meanwhile, Covid-19 put a lot of pressure on moving consumer goods (FMCG) segment. for high-end beer is inevitable.”
every market, including beer. “Covid-19 and As of June 2020, beer consumption accounted Meanwhile, according to figures from the
restrictions on drinking and driving put brewers for 20.7 per cent of the FMCG sector, down Ministry of Planning and Investment (MPI),
in a battle for survival,” Mr. Nguyen Van Viet, slightly from the 22 per cent recorded in the CPI for F&B services was down slightly in

32 | VIETNAM ECONOMIC TIMES | APRIL 2021