Market share of Habeco slips without brake

June 12, 2018 | 23:46
(0) user say
Delaying the divestment of the state’s stake in Hanoi Beer, Alcohol and Beverage Corporation (Habeco) will worsen the corporation’s business results, reducing the company's market share.
market share of habeco slips without brake
Habeco is hard-pressed by competition even on its traditional northern market

Habeco reports bleak business results and decreasing market share

In 2017, Habeco earned VND9.8 trillion ($429.58 million) in revenue and VND658 billion ($28.84 million) in after-tax profit, signifying decreases of 2 and 17 per cent, while simultaneously marking a decrease in profit in three consecutive years.

This year, Habeco only set 500 million litres of beer as production target, up 4 per cent on-year, while the firm’s profit will decrease by 8 per cent on-year.

Along with decreasing business results, Habeco reported a decline in market share. Notably, its market share decreased from 18.9 per cent in 2016 to 16.2 per cent in 2017. Its traditional product, Hanoi Beer also saw a decrease of 24.1 per cent in market share. According to the expectations of Ho Chi Minh City Securities Corporation, Habeco’s market share may decline by 15.3 per cent this year.

Due to the slip in market share, Habeco reported losses in the northern region, which is considered its home turf. At present, Sabeco is expanding its distribution network in the northern region, where it currently takes up 10 per cent of the market.

The saturation of the beer industry, in collaboration with the strict competition with other competitors are the two major reasons for the bleak business results of Habeco.

Furthermore, Habeco is claimed to run ineffective marketing. Besides, its products are not as diverse as those of competitors.

Uncertain divestment

In addition, the long delay in state divestment is another factor hindering the development of Habeco. As Habeco is on the list of firms to be divested by the state, the existing Board of Ddirectors of the firm does not have motivation to develop the Habeco brand, as they are waiting to be replaced.

Meanwhile, the Ministry of Industry and Trade is facing difficuties in looking for a strategic partner to transfer either a part or the entire 81.79 per cent owned by the state.

Even the most potential strategic partner Carlsberg, the Danish Brewer that currently holds 17.3 per cent of Habeco, stated that while it is interested in buying more of Habeco’s shares, it will only do so at a competitive price.

The Danish brewer even wanted to use its priority purchasing rights to buy Habeco’s stakes for low cost for numerous times but failed. According to the representative of Carlsberg, despite progress after numerous discussions, the two sides have yet to reach a compromise due to legal problems related to Carlsberg’s priority purchasing rights at Habeco.

There was information that other foreign investors, including Heineken and AB Inbev, are looking to acquire a stake in Vietnam’s third-largest brewer in order to increase their market shares. However, there is no information on these plans.

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional