Wednesday, September 30 2020

VietNamNews

Beer industry: market slowly recovers

Update: August, 30/2020 - 18:45

 

Beers on display at a supermarket in HCM City. — VNS Photo Xuân Hương

HCM CITY — Domestic beer consumption in the second half of the year is expected to improve over the first six months, while next year the beer industry can grow by 20 per cent compared to the low base this year.

Despite progress, beer consumption volume is unlikely to reach the figures recorded before the Covid-19 pandemic, according to SSI Research.  

“We believe that beer consumption volume may take several years to recover to the levels prior to the Covid-19 outbreak and before the promulgation of Decree No.100/2019/ND-CP [which outlines sanctions for drunk driving that took effect early this year].”

Demand for beer was negatively affected by the pandemic in the first six months, with consumption volume down by 12.7 per cent, while consumption of the FMCG portfolio dropped by only 7.3 per cent, according to Nielsen's statistics.

According to Nielsen, beer consumption volume in the second quarter dropped by 22.6 per cent compared to the same period last year. Nielsen's data reflects actual beer consumption, while the revenue of Sabeco (SAB) and other beer brewers in Việt Nam reflect figures from breweries to distribution agents.

The share of beer consumption accounted for 20.7 per cent of FMCG consumption in Việt Nam in the first six months of 2020, slightly down compared to 22 per cent last year.

Production output has recovered from May, with an increase of 60 per cent compared to the period from February to April. Accumulating output in the first half was down 17 per cent over the same period last year, according to the General Statistics Office of Vietnam.

The second quarter was the worst quarter for the beer industry due to the national social distancing measures in the first three weeks of April. Beverage businesses stopped operation from mid-March to early June. Non-essential businesses in high-risk localities were asked to stop operations again amid the second COVID-19 outbreak.

SSI Research said Q1 was the worst quarter for SAB's earnings, as SAB did not promote sales and distribution channels in Q1. However, its beer consumption in June almost recovered to levels prior to the COVID-19 outbreak.

It also reported higher profit margins thanks to its efforts to cut costs. Similarly, most of the listed beer brewers reported a recovery in Q2.

It estimates that SAB's beer output in 2020 will decrease by 30 per cent year-on-year. The company’s business outcome in the latter half of the year is expected to be better than that in the first half of 2020 if there is no social distancing applied across the country.

According to the report, COVID-19 has changed the industry sales structure, with an increase in sales through off-trade channels (all retail outlets like hypermarkets, supermarkets, convenience stores, mini markets, kiosks, wines and spirits shops).

“Consumption in off-trade channels will become even more important in the following years," SSI Research said.

Thus, beer companies are making efforts to boost sales on off-trade and modern trade channels.

In 2019, total beer production reached more than five billion litres (up 22.9 per cent over the same period in 2018), while consumption reached over four billion litres (up 29.1 per cent over the same period last year). — VNS

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