Breweries' profits plummet due to tough anti-drunk driving policy

By Phuong Dung   March 17, 2024 | 05:00 pm PT
Breweries' profits plummet due to tough anti-drunk driving policy
People hold glasses of beer at a restaurant in Hanoi, Vietnam, June 24, 2017. Photo by Reuters/Kham
Beer sales plunged by 11% in 2023 due to the government's zero tolerance for drunk driving, and breweries' profits were down 23%, liquor industry figures show.

At a conference on Friday the Vietnam Beer - Alcohol - Beverage Association (VBA) said beer consumption was sharply down, especially at restaurants and eateries.

The two giant breweries, Sabeco and Habeco, both suffered sharp declines in profits, it said.

Sabeco’s profits were down 23% to VND4.255 trillion (US$180.1 million), the lowest since 2016 if the Covid-19 period is not considered.

Habeco’s profits dropped 30% to VND355 billion.

While its members support the anti-drunk driving policies, a ban on any level of alcohol when driving is hurting beer production and supply chains, the association said.

"Restaurants and tourist areas cannot operate due to a lack of customers," a VBA representative said at the conference.

Nguyen Duy Hung, the association’s vice chairman, said the industry is also affected by consumers tightening spending and rising costs.

The costs of ingredients and materials have increased by 20-40%, resulting in higher prices, he said.

Dau Anh Tuan, deputy general secretary of the Vietnam Chamber of Commerce and Industry, said the beer industry could be hit with an excise tax hike.

In amendments it proposed to the Excise Tax Law last year, the Ministry of Finance suggested raising the tax on alcoholic drinks to curb consumption.

It is seeking public opinion on the proposal. The current excise tax rates are 65% for beers and 35-65% for liquor, depending on alcohol content.

The VBA agreed with the tax hike but pleaded with the government to delay it to after 2025, giving the industry time to recover.

But breweries said a tax increase could cause huge losses to the industry and nor would it be an effective tool to prevent alcohol consumption.

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