Vietnam: ThaiBev might take worse hit if Vietnam further widens alcohol regulation policies

The new drink-driving law already caused beer sales in Vietnam to drop 25%.

Thai Beverage (ThaiBev) might take a worse hit if Vietnam further widens and tightens its policies on alcohol regulation, according to a report by UOB Kay Hian.

Already, a newly-enacted drink-driving law, which penalises driving under the influence of alcohol, has been attributed for a 25% drop in beer sales since its introduction on 1 January. About 24% of ThaiBev’s group revenue comes from Vietnam.

Some countries with even tighter measures showed worse decline in consumption. In Russia, policies including a ban on online alcohol advertising have reduced the country’s total alcohol consumption by 43% from the 2003 peak to 2016.

“The stricter regulations in Vietnam appear to be initially centered on the hazards of drink driving rather than a general clampdown on alcohol usage,” analyst Lucas Teng said.

Still, the sector may deal with regulatory risks, in addition to higher competition, as prices are lowered to capture support from consumers.

Outside the new regulation, ThaiBev’s beer business Sabeco already reported a 7% YoY decline in net sales on Q4 2019, as it saw lower sales volume and higher tax from changing one of its breweries from an associate to subsidiary.

Despite that, Vietnam’s growing middle class and youthful population, with over 60% of its population under the age of 40, has helped drive expectations for the beer industry. According to Euromonitor, beer consumption in the country skyrocketed 284% from 2004 to 2018.

31 January, 2020