Leading brewer reports another year of falling profits

By Minh Son February 10, 2019 | 07:43 pm PT

Hanoi Beer, a product of Habeco, is an integral part of street food in Vietnam. Photo by Shutterstock

Habeco’s profits fell by 23 percent last year to VND667 billion ($28.71 million), the fourth straight year of decline.

Hanoi Beer Alcohol and Beverage Corp, as it is formally known, one of Vietnam's biggest brewers, also reported a 5 percent fall in revenues to VND9.4 trillion ($404.67 million). There was a sharp increase in operating expenses, especially cost of sales.

After falling for four years profits are now less than half of the 2014 figure of VND1.44 trillion ($62.12 million).

Habeco’s decline is contrary to the general growth trend as Vietnam remains one of Asia's biggest beer consumers. According to Euromonitor statistics, while global beer consumption volume remains unchanged last year, the figure for Vietnam soared.

According to data from the Vietnamese Beer, Alcohol and Beverages Association, on average a Vietnamese person drank nearly 45 liters of beer in 2017, an almost 50 percent jump in two years.

Many securities firms believe that though Habeco still leads the beer market in the north, it faces challenges like changing consumer tastes and competitive pressure from foreign brands. It has only been able to maintain market share in the low-priced segment, ceding ground in the premium segment to brands such as Heineken, Saigon Beer (now a subsidiary of ThaiBev) and other foreign brands.

Ban Viet Securities Company's latest data shows Habeco's share in the beer market has fallen continuously in the last six years, from nearly 20 percent in 2010 to 18 percent by the end of 2017.

The reason for this is that the low-cost segment, its strength, is shrinking, said the securities company. The cheap beer segment now makes up of only 8 percent of the market compared to 14 percent seven years ago.

Vietnam is famous for its beer drinking culture, and it is widely believed that business deals go more smoothly over a few drinks.

The country is the biggest beer market in Southeast Asia, consuming nearly four billion liters in 2017. It spends on average $3.4 billion on alcohol each year, or $300 per capita, while spending on health averages $113 per person, according to the Ministry of Health.