Facing continuous difficulties in terms of policies, consumer markets and input materials, Habeco – a 60-year-old Vietnamese beer brand - has applied innovative solutions over the years to enhance its products, sales channels and inventory management in order to survive.
The Hanoi Beer Alcohol and Beverage Joint Stock Corporation (Habeco), listed on the Ho Chi Minh Stock Exchange (HoSE) as BHN, was formerly known as Hommel Brewery and was built by the French in 1890. In 1957, the government took over and changed its name to Hanoi Brewery. A year later, the first bottle of a Vietnamese beer branded Truc Bach was introduced.
Over 65 years of formation and development, the company has developed many product lines that make up the Habeco brand, such as Hanoi draft beer, Hanoi canned beer, Truc Bach and Hanoi Premium. Habeco currently ranks first in terms of market share in the north and third in Vietnam.
In its most prosperous period from 2014-2017, Habeco's revenue approached the VND10 trillion ($412.2 million) mark and its net profit reached VND800-1,000 billion ($41.2 million). However, in recent years, the company's business results have gradually declined due to the beer industry’s slowdown and increasingly fierce competition.
Habeco said that big brands in the southern market such as Sabeco and Heineken, which is backed by a multinational corporation with financial potential many times stronger than Habeco, have stepped up their investments in the North - the major market for Saigon Beer. On the other hand, increasing incomes have prompted residents to gradually shift from the low-end segment (Habeco's strength) to the high-end and near-high-end segments.
In early 2020, the beer industry faced many difficulties, with the entry into force of the government’s Decree 100/2019/ND-CP stipulating administrative sanctions on drunk drivers and Decree 24/ND-CP featuring strict regulations on alcohol advertising. At the same time, the Covid-19 pandemic changed consumer habits and limited gatherings, causing consumption of beer products, including those of Habeco, to plunge.
In addition, the epidemic also caused supply chain disruptions, pushing up the prices of input materials for beer production such as gasoline, malt, cans, paper boxes and bottle caps, affecting beer companies’ profit margins, In respone, Habeco changed designs, improved beer product quality, and introduced more beer products in the high-end segment like Hanoi Bold, Hanoi Light and Hanoi Premium. It also launched new product lines with convenient packaging to meet consumer needs such as 500ml and 1-liter bottled Hanoi draft beer; and 330 ml canned versions of Hanoi Bold and Hanoi Light.
As traditional consumption channels (restaurants, shops) were affected during the epidemic, Habeco promoted consumption on modern distribution channels such as supermarkets and e-commerce platforms (Tiki, Shopee, Lazada) to capture modern consumer trends and easily reach target customers. On peak sales occasions of summer and Lunar New Year (Tet), the firm deployed promotional programs for the bottled and canned Hanoi Beer products.
In addition, Habeco also strengthened cost management, lowered product prices, closely followed the supply and demand of the raw material market, negotiated with suppliers to maintain contract prices, and minimized rising raw material costs to improve business efficiency.
Thanks to these solutions, in the first year the epidemic was completely under control, the economy returned to normal and tourism reopened, Habeco recorded a strong improvement in its business results, with 2022 revenue reaching VND8,398 billion ($345.88 million), the highest in three years and a year-on-year increase of 21%. Its net profit hit VND463 billion ($19 million), surging 52%.
It said that the market price of malt - an input material that accounted for a large proportion of production costs in 2022, increased 40-50%. However, thanks to early signing contracts at good prices, its malt cost increased only 10%.
In the first nine months of 2023, the beer company reported a 7% decrease in revenue. Although it saved significant sales and management costs, the falling gross profit margin caused the net profit to decrease by 36% to VND278 billion ($11.45 million). However, the business still exceeded 31% of the year's profit plan after nine months.
Habeco’s total assets as of the end of the third quarter had reached VND7,560 billion ($311.4 million), including VND4,000 billion ($164.74 million) in cash and deposits. In terms of capital structure, its liabilities were equal to 36% of equity, with no long-term debt and VND27 billion ($1.11 million) in short-term debt.
In its development orientation, Habeco is focusing on affirming its leading position in the northern market, especially the mid-end segment; while developing and expanding its presence in the central and southern markets. The company has also exported products to Europe (France, England, Austria and Czech Republic), South Korea and Japan through Vietnamese supermarkets and restaurants.
In the coming time, the company will continue to boost exports to traditional markets as well as countries with large Vietnamese communities.
On the stock market, BHN closed Thurday at VND40,000 ($1.65) per share.