Vietnam's Beer Industry Sees 20% Revenue Decline in 2023

The beer industry in Vietnam experienced a 20% decline in revenue and profits in 2023, reported. According to the Vietnam Beer-Alcohol-Beverage Association (VBA), the policy of controlling alcohol concentration is a key factor contributing to the significant decline in beer consumption, particularly in restaurants and bars.

The VBA projects an 11% decrease in revenue and a 23% drop in pre-tax profit for the beer industry in 2023. In the previous year, 2022, the industry also faced a negative growth rate of 7%.

Notably, two major players in the beer industry are expected to see a sharp decline in profits in 2023. Saigon Beer - Alcohol - Beverage Joint Stock Corporation (Sabeco) reported a post-tax profit of approximately VND 4.255 billion, down by 23%. Similarly, Hanoi Beer - Alcohol - Beverage Joint Stock Corporation (Habeco) witnessed a 30% decrease in profits compared to 2022, amounting to 355 billion VND.

While businesses support the alcohol concentration control policy, they highlight the adverse effects of an absolute ban on production and supply chains within the industry. Many restaurants and tourist areas are struggling to operate without customers, resulting in reduced employment, revenue, profits, and government revenue.

During a conference on March 15, Nguyen Duy Hung, Vice President of VBA, noted that the industry is grappling with decreased consumer spending following the Covid-19 pandemic. Rising raw material prices, including malt, rice, and cans, have led to increased production costs, prompting businesses to raise prices, thus burdening consumers.

Moreover, Mr. Dau Anh Tuan, Deputy General Secretary of the Vietnam Confederation of Commerce and Industry (VCCI), emphasized the impact of policy changes, such as adjustments to special consumption tax rates.

Under the proposed amendments to the Law on Special Consumption Tax, alcoholic beverage taxes may rise to regulate consumption behavior. Currently, the special consumption tax rate for beer stands at 65%, while for wine, it ranges from 35-65% depending on the alcohol content.

While acknowledging the necessity of tax increases, VBA representatives have proposed a phased approach to amending the Special Consumption Tax Law starting from 2025, aimed at facilitating industry recovery.

Meanwhile, businesses have urged the government not to raise special consumption taxes on alcoholic beverages due to concerns about significant economic repercussions and a decline in budget revenue. Instead, they advocate for policies that promote technological innovation, product diversification, and economic benefits for users and the nation.

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