Saigon Beer – Alcohol – Beverage Corporation, or better known as SABECO, is facing mounting challenges due to the impact of Decree 100 and stringent penalties for drink driving.
A new and upcoming challenge will be a proposal to increase special consumption tax on alcoholic beverages. In an already highly competitive market, this latest development poses a significant threat to Sabeco’s business operations.
Vietnamese consumers are becoming more cautious, cutting back on non-essential expenses while prioritizing necessities, clothing, and healthcare. This shift in spending habits has led to a decline in beer and alcohol consumption, with many consumers opting for healthier alternatives.
This issue is further compounded by Decree 100, which enforces strict penalties for road and traffic violations.
According to a report, in the 3rd quarter of 2024 alone, a total of 30,000 F&B establishments in Vietnam were forced to shut down. Sabeco is struggling to maintain its market position amidst competition from global brands like Carlsberg, Heineken, and Tiger. Sabeco suffers from outdated product portfolio as well as being slow to adapt to latest market trends. Currently, its premium beer category only contributes 2% of its overall beer portfolio, while Vietnamese have shown growing preference for premium beer products. In addition, Sabeco also lagged behind in terms of marketing strategies as it is slow to embrace e-commerce and digital marketing.
A new proposal to increase the special consumption tax on alcoholic beverages to 100% will probably push Sabeco as well as other market players into the abyss. Especially for Sabeco as it is heavily dependent on the domestic market. Sabeco lost 8% share of the market to competitors from 42% in 2018 to 33.9% in 2023.
In Vietnam, the beer sector dominates the alcoholic beverage market with 98.6% market share. Key players include Sabeco, Heineken Vietnam, Habeco, and Carlsberg, with combined market share of nearly 95%. However, these companies are currently experiencing substantial declines in sales while production costs surged. This is further dampened by stagnant beer prices.
