An unprecedentedly strict campaign against driving under the influence (DUI) launched in 2020 has sent alcoholic drinks sales as well as brewers’ earnings in Vietnam plunging.
Sabeco, once the biggest brewer in Vietnam, reported consolidated revenue of VND8.52 trillion ($349 million) in the fourth quarter of 2023, down 15% year-on-year, according to its quarterly financial statement.
Its Q4 net profit dropped 9.2% year-on-year to VND946.65 billion ($38.77 million), marking its lowest quarterly earnings in the past two years.
The brewer’s 2023 consolidated net profit shrank 21.2% year-on-year to VND4.12 trillion ($168.6 million). Its revenue fell 13% to VND30.46 trillion. As such, it met 74% and 76% of the year’s profit and revenue targets, respectively.
Sabeco, with 53.59% indirectly owned by ThaiBev, attributed its lower sales to intensified competition, and lower consumer demand from domestic economic slowdown coupled with strict implementation of Decree 100, the firm said in a filing sent to the Ho Chi Minh Stock Exchange.
Under Decree 100, effective in January 2020, drivers found having trace amounts of alcohol in their blood are charged with DUI. Car drivers can be fined up to VND40 million ($1,638) and have their driving license suspended by up to two years.
Mired in the same dilemma, Habeco, a major brewer in northern Vietnam, saw its consolidated net profit fall 28% year-on-year to VND335.4 billion ($13.76 million) last year. Its revenue dwindled 8% to VND7.56 trillion ($310.17 million).
Like its competitor Sabeco, Habeco, with 17.34% held by Carlsberg, blamed stiff competition, weaker consumer demand, and the intensified crackdown on DUI in the final months of 2023 for its poorer earnings.
The same situation has been observed at other brewers like Hanoi-Hai Duong, Hanoi-Thanh Hoa, and Saigon-Mien Trung.
Even worse, Hanoi Liquor and Beverage JSC, popularly known as Halico, incurred a net loss of VND9.88 billion ($404,800) in 2023, extending its loss-making streak to a fourth year.
The strict implementation of Decree 100, especially in major cities like Hanoi and Ho Chi Minh City, has drawn criticism by some drinkers, beer producers and restaurants, saying that zero tolerance of alcohol is overly excessive, but others applaud it.
To stimulate consumption, brewers have launched big promos like discounts, but sales remain tepid, according to local media reports. Beer restaurants in major cities have seen sharp drops in customers even with the Lunar New Year holiday approaching.