Glass half full for beer sector recovery

Sabeco’s sales and distribution models are being revamped in the face of new market complexities

The leading beverage giant SABECO began to regain some of its lost momentum in the second quarter, after being set behind by COVID-19 and tough local drink-driving laws earlier this year. It is expected to maintain the recovery trend at the end of this year as the market gradually recovers from the pandemic.

According to a recent report from brokerage SSI Securities Corporation, SABECO’s gross margins would fluctuate between 28.2-28.5 per cent over the next 2-3 years thanks to its digitalisation project, named Sabeco 4.0.

According to company general director Bennett Neo, Sabeco 4.0 is a strategic initiative to transform its business using digital technologies, organisation structures, harnessing data, and improving information flow in order to make better decisions, improve governance structures, and automate the business with digital technologies where possible.

“The end goal we want to achieve is to optimise, standardise, and automate the way of working across all entities nationwide in order to strengthen our market leadership in the Vietnamese beer market,” said Neo.

In the current phase of Sabeco 4.0, the company will focus on transforming the company’s sales and distribution model.

This includes developing comprehensive business management solutions to help Sabeco achieve its business targets; standardising sales processes in line with domestic and international standards; and applying a synchronised, centralised, and standardised sales solutions system, aside with strengthening its ability to monitor and control operations based on data and building up an experienced internal workforce capable of operating the new systems.

This month Sabeco announced that it would pay its first cash dividend for the 2020 financial year on December 18, in which the dividend rate is set at 20 per cent, meaning shareholders will receive VND2,000 (0.086 US cents) per share.

The total dividend rate Sabeco set for 2020 was 35 per cent. The two biggest shareholders – State Capital Investment Corporation and Vietnam Beverage Co., Ltd. – will receive VND461 billion ($20 million) and VND687 billion ($29.9 million), respectively.

In the third quarter, Sabeco reported that revenues were down 17 per cent and post-tax profit up 1 per cent on-year, reaching VND 8 trillion ($347.8 million) and VND 1.47 trillion VND ($63.9 million) respectively. The gross profit margin increased from 24.6 per cent to 30.7 per cent.

Although revenues declined compared to 2019, it was up from the previous quarter thanks to recovery of the market after the COVID-19 pandemic. It attributed the growth in profits to better cost management.