Sabeco sees recovery in second quarter after dual pressures

Sabeco's performance has bounced back with the market, but its main challenges have not been dispelled

Vietnam Beer-Alcohol-Beverage Corporation (Sabeco) has just announced its business results for the second quarter, with both revenue and profit much higher than the first quarter's VND5 trillion ($217.39 million) of revenue and VND 700 billion ($30.43 million) of profit. This shows that the effects of Decree No.100/2019/ND-CP on sanctions for drink-driving and the COVID-19 epidemic are softening.

In the second quarter of this year, net revenue went up 45 per cent on-quarter while earnings rose by 66 per cent, supported by improving sales in May and June following the COVID-19 lockdown.

Neo Gim Siong Bennett, general director of Sabeco said the company's performance has improved as the market gradually recovers from the pandemic.

However, throughout the first six months, Sabeco's revenue and profit dropped on-year, reaching VND12.044 trillion ($523.65 million) and VND1.933 trillion ($84 million), respectively. Sabeco adjusted its business plan to better align with market conditions. Accordingly, the company has fulfilled 51 per cent of its revenue plan and 59 per cent of the profit plan for the year.

In a recent e-mail interview with VIR, Sabeco said, “While it is difficult to provide forecasts due to uncertainty, particularly with regards to COVID-19, we have been seeing some positive signs of recovery as of late. This is in large part attributable to the Vietnamese government’s swift and effective actions to prevent and contain the spread of the COVID-19 pandemic. Further, this has helped put the country’s economy in a great position to recover faster, and we believe that this bodes well also for our industry and our company."

Sabeco added that the pandemic has altered consumption habits. "For instance," they wrote, "we see off-premise as potentially becoming the new norm after COVID-19. The pandemic has also accelerated people’s move towards online shopping and home delivery. We at Sabeco are working to adapt to these developments, including planning how to structure our processes, employees, logistics and supply chain."

For instance, the corporation plans to continue focusing on developing the "home delivery" channels it set up when Vietnam introduced strict social distancing initiatives.

Meanwhile, regarding Decree 100, Sabeco said, "We at Sabeco fully understand the good intentions of the government’s policy in line with the campaign to reduce drink-related accidents. Sabeco, along with other members of the Vietnam Beverage Association (VBA), is continuing to engage relevant authorities to identify effective ways to promote and encourage responsible consumption, in line with the government’s objective."

Given these challenges, the company feels it is especially important for it to double-down on meeting the needs of consumers and adapting to new market demands.

Bao Viet Securities (BVSC) predicted that 2020 would be a challenging year for beer and beverage firms who are experiencing two main sources of headwinds in the new decree and the coronavirus outbreak which are expected to continue slowing down beer and alcohol consumption in Vietnam in the foreseeable future.