Lower growth trend brews for Vietnam beer industry

By Dang Khoa   June 3, 2020 | 12:39 am PT
Lower growth trend brews for Vietnam beer industry
Customers hold glasses of beer at a restaurant in Hanoi. Photo by Reuters/Kham.
Vietnam's strict implementation of drunk driving laws and other factors will dampen the beer market this year, belying earlier expectations of high growth rates.

A recent report by the Vietnam Industry Research and Consultancy (VIRAC) says this will also be a trend in coming years despite the fact that a million people become newly eligible to consume alcohol each year.

The report estimates an annual growth of 6-7 percent for the domestic beer industry. It notes that the industry’s stock value dropped by nearly 13 percent last year and says small businesses are likely to be most affected by the drop in growth.

In 2019, Vietnam consumed more than 4.6 billion liters of beer, an increase of more than 10 percent over the previous year. According to Germany-based data portal Statista, beer sales revenue rose 6.88 percent year-on-year to around $7.75 billion.

The main reason for the industry slump is Decree 100, which took effect on January 1 this year, imposing stiff penalties for drunk driving. Those riding bicycles and electric bikes will also be fined for driving under the influence. Motorcyclists and car drivers can be fined VND6-8 million and VND30-40 million ($1,300-1,725), double the old levels and have their licenses suspended for 22-24 months.

Other industry observers have said that the Covid-19 pandemic is also likely to contribute to slower growth this year.

Despite all these challenges, the industry has further growth opportunities, for instance, in the export sector, the report says.

The report notes that Vietnam’s export markets, including China and Southeast Asian countries, are experiencing high growth in food and beverage consumption. In addition, Vietnam also enjoys free access to key export markets under trade agreements it has signed, it adds.

Equatorial Guinea in Africa is the Vietnam’s biggest export market, accounting for 20 percent.

Vietnam’s beer export in 2019 is estimated at 46 million liters or $45.87 million.

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