Dull market prompts Heineken to suspend factory in central Vietnam

Heineken Vietnam Brewery Limited Company, or Heineken Vietnam, has suspended operations at its factory in the central province of Quang Nam since June 12, citing multiple challenges in the local market.

In an announcement on Monday, the provincial People’s Committee cited Heineken Vietnam as stating that the beer industry has been struggling with significant challenges post-Covid-19 stemming from the economic slowdown, leading to declined consumer confidence and demand.

Additionally, the enforcement of Decree 100, which stipulates zero-alcohol tolerance whilst driving, has led to changes in customer behavior.

As a result, the Vietnamese beer market experienced a double-digit decline in 2023 and has continued to see a single-digit decrease so far this year, Heineken said.

The halt at the Quang Nam brewery aims to seek optimal asset-related solutions, it noted.

The firm said it needs to streamline operations so that it can continue to invest and develop in the host country, adding that the impacted employees would be relocated to other Heineken Vietnam factories or laid off with the best possible benefits.

Heineken Vietnam, a joint venture between Heineken and state-run Saigon Trading Group, has been operating in Vietnam since 1991 and has invested over EUR1 billion ($1.07 billion) in the country.

The company has six breweries in Vietnam, employing around 3,000 employees. The Quang Nam establishment, operational since 2007, is the smallest of the six plants.

Before Covid-19, the Heineken Quang Nam factory contributed VND1 trillion-1.2 trillion ($39.28-47.14 million) to the provincial budget annually. However, this figure has declined post-pandemic, standing at only VND20 billion ($785,590) in the first quarter of 2024.

Vietnam's beer output in Q1 was 1.02 billion liters, down 4.1% year-on-year, according to the General Statistics Office.

Heineken's latest investment in Vietnam took shape in November 2022, when it signed a memorandum of understanding to invest an additional $142 million in its brewery in Ba Ria-Vung Tau province, increasing its brewery’s capacity from 11 million hectoliters (hl) to 16 million.