Beer and alcohol enterprises: Find a way to avoid "double impact"

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Enterprises in the beer and wine industry still need a lot of efforts to escape difficulties. Source: Internet.

Decrease or loss

In the separate financial statements as of the end of the third quarter of 2020, Sabeco recorded nearly VND20,100 billion of revenue, down 28.7% over the same period last year. Profit after tax was VND3,403 billion, down 20% compared to the same period last year. Of which after-tax profit attributable to shareholders of parent company reached VND3,257 billion ND.

In addition, Sabeco's subsidiaries also recorded a decline in revenue. Western Saigon Beer Company reported a decrease of 48% in Q3 profit over the same period, reaching VND21.6 billion. This profit was even lower than the profit achieved in the first quarter.

The Saigon Beer Quang Ngai Company also recorded a profit after tax of VND27 billion in Q3, down 23% year-on-year. Central Saigon Beer (SMB) after-tax profit was nearly VND50 billion, down 7% over the same period last year.

At Habeco, business results recorded losses in the first and second quarters. In the third quarter, the situation was "brighter", helping the business results in nine months of this enterprise to reach VND2,720 billion in net revenue, up slightly by 1.7% over the same period last year.

Representatives of Habeco said that the influence from the "double impact" of regulations on alcohol use and the Covid-19 pandemic led to a decrease in consumption.

Along with Sabeco and Habeco, other beer, wine and beverage companies are also facing difficulties. For example, the Hanoi Beverage and Wine Joint Stock Company (Halico) recorded many consecutive years of losses, by the end of the third quarter, this company has accumulated losses of VND413 billion.

Finding a "bright spot"

Despite the double impact, the business results plummeted, but looking at the quarterly business situation, the business results of both Sabeco and Habeco have recovered. This shows that businesses have gradually adapted to the situation, reducing all kinds of costs to do business more effectively.

For example, Sabeco reported a profit of VND1,479 billion in the third quarter, slightly higher than the VND1,460 billion profit in the same period last year, although the revenue dropped 17 percent to VND8,052 billion. This interest also helps Sabeco approach the largest quarterly profit in history - Q2 2019 with an after-tax profit of VND1,530 billion. While before that, Sabeco reported Q1 profit was VND717 billion, down by 44% YoY and Q2 profit was VND1,216 billion, down by 20% YoY.

According to Sabeco's management, the company still gained market share through sales in Q1/2020 due to the contribution from a higher proportion of traditional sales channels compared to the whole industry.

On the other hand, the increase in Sabeco's Q3 sales was due to better cost management. The company made a series of changes in business and administration, trying to increase productivity, cut some operating costs and negotiate with landlords to reduce costs.

A "bright spot" in the market is that Heineken Vietnam Brewery Co., Ltd. has launched a new product category: non-alcoholic beer. This is a new type of product that meets the needs of drivers.

Phung Hoang Co, Vice Chairman of the Board of Directors of Vietnam Report Joint Stock Company (Vietnam Report) said that businesses need to study and implement this idea. To remove difficulties for the alcohol industry, businesses need to consider increasing alternative products, clean and organic products should be focused in the beverage industry. Besides, businesses need to face issues of digital transformation, reaching users and restructuring distribution networks.

Sharing the same point of view, economic expert Assoc. Ngo Tri Long said that non-alcoholic beer is considered the key to help remove regulations on health and safety today. Currently this segment is quite new. So far, there are only a few brands of non-alcoholic beer in the Vietnamese market such as: Heineken 0.0, Sagota, Steiger, Bavaria, Oettinger, and only Sagota (belonging to Saigon Binh Tay Beer Company) is involved in domestic production. Therefore, in the medium and long term, the beer and alcohol industry will recover and grow about 3-3.5%, unlike in the last five years (6.6%).

However, if the pandemic continues, the companies in this industry will recover more slowly and grow at about 2-2.5%.