COVID-19 and Decree 100 keep hampering the local beer sector from recovery

A full rebound for the beer market is only forecast in 2022

The latest report of SSI Securities Corporation pointed out that the sector has been recovering, however, a full rebound may take more than a year, with normalcy returning only in 2022.

One of the main reasons is the serious drop in international arrivals to Vietnam. Although the nation has done a good job in controlling COVID-19, the rest of the world has been struggling with the health crisis. Therefore, in 2021, the number of overseas travellers is foreseen to remain low. According to General Statistic Office of Vietnam, international tourist expenditure made up about 5.5 per cent of the country’s retail sector in 2019.

Additionally, footfall at restaurants, cafés, and shopping malls, among others have fallen significantly by 10 per cent on-year, according to a Google report published last December.

Moreover, Decree No.100/2019/ND-CP entering into effect has also contributed to the weakness of brewers in Vietnam. Specifically, drink drivers shall be fined for VND6-40 million ($825) if tests show an alcohol content exceeding 80mg per 100ml of blood or 0.4mg per litre of breath. Their licences shall be revoked for 22-25 months, far longer than the previous 4-6 months.

The report added that since the regulation officially came into force, local people have grown more conscious of their drinking behaviour, especially those live in big cities where drivers are regularly checked by traffic police.

SSI Securities also found that the demand for beer products over the first three quarters of last year dropped significantly by about 3.6, 22.9, and 11.9 per cent on-year, respectively.

Otherwise, the total consumption of fast-moving consumer goods plummeted by 7.5 per cent in the first nine months of last year. Of this, the second quarter was the hardest for the entire sector due to the month-long social distancing, and also the three-month closure of non-essential services like bars and pubs, the main consumption channel of beer.

As of the end of 2020, total beer manufacturing output reached 4.4 billion litres, down 13.9 per cent on-year.