The domestic beer market for years has been controlled by four big breweries – Heineken, Sabeco (Saigon Beer-Alcohol-Beverage Corporation), Carlsberg and Habeco (Hanoi Beer Alcohol and Beverage), with 94.4 percent of the market share in 2021. Of this, Heineken and Sabeco accounted for 78.3 percent.

Competition for market share

Habeco in the second quarter of the year began new policies to boost sales during the high season of summer.

Its H1 financial report showed net revenue from sales and services of VND3.487 trillion, an increase of 5.3 percent over the same period last year. Its pre-tax profit reached VND286 billion, up by 5.9 percent.

For Sabeco, the situation has improved since Q1. The company said that it has benefited from the market reopening and sale promotion programs focusing on the upcoming Tet sale season and its well controls of sales and management costs.

In H1, Sabeco had net revenue from sales and services of VND16.314 trillion, up by 25 percent, while its pre-tax profit was VND3.736 trillion, up by 47 percent. The post-tax profit was VND3.029 trillion and the holding company’s post-tax profit VND2.838 trillion, up by 47 percent.

According to Bloomberg, Sabeco’s post-profit margin was 13.49 percent, higher than Hebeco’s (4.1 percent). Sabeco has a Capex (capital expenditures)/revenue ratio much lower than other beer companies, 1.25 percent vs 3.54 percent.

At Habeco, the Ministry of Industry and Trade (MOIT) holds 81 percent of shares, and Carlsberg Breweries 17.5 percent. The foreign investor expressed its willingness to increase the ownership ratio if the state continues divesting shares from Habeco.

In a notice released in July, MOIT’s leaders requested the Industry Department to speed up negotiation with Carlsberg on a share transfer.

Habeco has 26 subsidiaries and holds more than 50 percent of shares in 16 companies. In another six companies, it holds from 20 percent to slightly below 50 percent, and in the remaining four companies, it holds less than 20 percent.

Regarding market share, Habeco products are mostly sold in the north, so revenue is not as high as expected. Its revenue reached a peak of VND10.032 trillion in 2016 before gradually decreasing to VND9.405 trillion in 2019.

The figure continued to decrease in 2020-2021 to VND7.514 trillion and VND7.053 trillion, respectively. The net profit from business activities dropped sharply from VND1.194 trillion in 2016 to VND385 billion in 2021.

According to Habeco, the tax arrears collection and reversion to the investment and development fund to pay dividends in 2016-2019 considerably affected the company’s financial resources in 2020-2021. 

Meanwhile, Sabeco still could preserve resources to compete with Habeco in the northern market.

Sabeco’s revenue from business activities increased steadily in 2016-2019, from VND30.569 trillion to VND37.899 trillion. The net profit also increased during that time, from VND5.692 trillion to VND6.675 trillion before dropping in 2020-2021.

As the business performs well, Sabeco pays high dividends. At the 2022 shareholders’ meeting, Sabeco approved a plan to pay VND2.244 trillion in dividends (35 percent).

Meanwhile, Habeco plans to pay VND278 billion in dividends for 2021. The undistributed profit is VND7.2 billion.

Analysts say the competition of the two brewers is becoming fierce as northern provinces, which used to be Habeco’s home market, are threatened by Sabeco. 

Sabeco has expanded its market share since Q3 2021 thanks to a large distribution network which covers areas not seriously affected during Covid-19 like northern rural areas. Instead of trying to compete in the high-end market, Sabeco is focusing on the popular segment which has the highest consumption level.

Market analysis firms believe that consumption volume in 2023 will return to the level seen before Covid-19. Euromonitor predicted a CAGR (compound annual growth rate) of 10 percent in 2021-2026.

Duy Anh