Habeco forecasts drop in profits in 2018

Sabeco and Habeco are facing strong headwinds this year, so much so that in May 2018 Habeco announced that it expects its pre-tax profit in 2018 at only VND 746 billion (USD 32.6 million), down eleven percent compared with 2017, local media report.

The decline in profit comes despite a projected 13 percent hike in revenue to VND 8.9 trillion (USD 389.3 million) because Habeco worries that fierce competition, a hike in input costs and a potential increase in excise will negatively impact its bottom line.

This cannot please Carlsberg, which is a strategic investor in Habeco. The Danish have been in talks with the government to acquire a majority stake in the brewer for years.

Its major rival Sabeco has not enjoyed a smooth ride either. In early May 2018 it released first quarter 2018 results, which showed an increase in revenue but a decrease in after-tax profit, despite massive cuts to admin and marketing expenses. Still, Sabeco projects revenue (+4.4 percent) and after-tax profit (+2.2 percent) to rise this year.

Last December, Vietnam Beverage, a unit of Thai Beverage, successfully acquired 53.6 percent of Sabeco for USD 4.8 billion.

In 2017, beer consumption in Vietnam was estimated to be over 40 million hl, an increase of six percent over 2016, according to the Vietnam Beer Alcohol and Beverage Association (VBA). VBA expects beer consumption to rise to 41 million hl by 2020, meaning each Vietnamese will consume around 43 litres per year.

Sabeco, Vietnam's largest brewer with an estimated 40 percent share of the beer market, churned out 17 million hl in 2017, an increase of 6.6 percent year-on-year, while Habeco (18 percent market share), brewed 6.6 million hl, down 6.5 percent, it was reported.