Vietnam: Plans to double alcohol excise tax to have limited impact on drinks market in Vietnam

In July 2024, Vietnam’s Ministry of Finance proposed to double excise taxes on alcohol by 2030 to increase revenue and discourage excessive drinking.

These plans to double the alcohol excise tax will have a limited impact on the already slowing alcoholic drinks market in Vietnam. Beer consumption dominates alcohol drink patterns, but is already a mature market. Wine will retain its place as a premium alcoholic drink, while spirits consumption will be driven by a growing sense of consumer nationalism, the Thailand Business News reported on July 23.

Vietnam’s alcoholic drinks sector is experiencing a remarkable transformation, projected to sustain momentum despite recent increases in excise taxes. The government’s objective to rein in alcohol consumption through higher taxes aims to improve public health. However, this policy has not deterred the demand for alcoholic beverages, as the rising middle class seeks premium and diverse offerings.

Market dynamics indicate that while immediate sales may suffer, the long-term outlook remains buoyant. Consumers are increasingly inclined to explore craft beers, imported wines, and premium spirits, which suggests a shift towards quality rather than quantity. Additionally, the growing trend of social drinking, especially among younger generations, reinforces the resilience of the sector.

Furthermore, local producers and international brands are adapting to the new tax landscape by innovating their product lines and enhancing marketing strategies. As Vietnam’s economy continues to expand, the alcoholic drinks sector is poised for sustainable growth, underpinned by evolving consumer preferences and a vibrant market environment.

23 July, 2024