Vietnam’s clampdown on drink-driving could slash beer sales
Vietnam | Beer sales in January are estimated to have dropped by at least 25 percent, as the authorities have cracked down on driving under the influence. Analysts say the new measures could drive down beer sales this year by 5 percent.
Since 1 January 2020, anyone caught driving under the influence of alcohol on a motorbike can be fined up to VND 8 million (USD 345) and banned for two years. Car and truck drivers face up to VND 40 million (USD 1,730) in fines and an immediate licence suspension. The law, which came after a number of high-profile accidents last year, sets the blood alcohol concentration for drivers at zero.
Heineken, which ranks number two brewer in the country behind Sabeco, has seen its share take a hit over fears that the government’s get-tough-on-drunk-driving law is reining in one of the world’s fastest-growing beer markets. Its share price dropped from EUR 105 on 17 January to EUR 98.32 on 31 January 2020.
According to the Vietnam Beer Alcohol Beverage Association, its members have complained about a plunge in beer sales. The Vietnamese consumed 46 million hl beer in 2019, a 10 percent growth from 2018.
Vietnam is one of Heineken’s largest markets globally. As reports the Financial Times, Vietnam generates roughly 5 percent of Heineken’s group sales, and about 12 percent of group EBIT. Nearly half of its revenues from Asia-Pacific – 41 percent – come from Vietnam, the newspaper says, quoting Trevor Stirling of Bernstein Research. “That would make about EUR 1.2 billion [USD 1.3 billion] of annual revenue,” he was quoted as saying.
Mr Sterling estimates that beer sales could decline 5 percent over the course of 2020, and Heineken would suffer along with its competitors. However, he believes the slump to be temporary as bar owners and consumers will find ways and means around the tough regulation.
Heineken’s Vietnamese subsidiary has six breweries in the country, producing among others, the Heineken and Tiger brands. Its market share is around 30 percent, according to Reuters.
