Alcohol and beer consumption is booming, and local beverage producers are cashing in.
This has attracted increased attention from investors, both locally and internationally, who are looking to tap into the sector.
Vietnamese people consumed 4 billion litres of beer in 2017. This figure is expected to climb to 5.6 billion litres in 2035, according to the Việt Nam Beer Alcohol Beverage Association (VBA).
Each Vietnamese person drank an average of 43 litres per year, making the country the third-largest per capita consumer in Asia, just behind China and Japan.
Việt Nam was also among the world’s top 15 beer-consuming nations last year.
With 100 million consumers, the market has attracted a number of foreign giants looking for a share of the pie.
Thai giant conglomerate ThaiBev purchased the Ministry of Industry and Trade’s stake in the Saigon Beer-Alcohol-Beverage Corporation (Sabeco) in 2017, and currently holds 53 per cent of the company’s capital.
Danish brewing giant Carlsberg also wants to invest more in the Hanoi Beer Alcohol and Beverage Joint Stock Corporation (Habeco) after becoming a strategic investor in 2008.
Currently, more than 90 per cent of Việt Nam’s beer market share lies in the hands of Sabeco, Habeco, Heineken and Carlberg.
The remaining 10 per cent belongs to local beer companies and newcomers such as Sapporo and Budweiser.
Listed brewery firms have witnessed robust business growth thanks to rising demand.
In the first six months of this year, Sabeco achieved a net revenue of VNĐ18.4 trillion (US$787 million), up 8.5 per cent against 2018. Post-tax profit reached VNĐ2.8 trillion, an increase of 15.2 per cent year-on-year.
Thanks to this result, Sabeco has completed 47.4 per cent its revenue target and 59.8 per cent of its profit target for the year. The firm expects to exceed these targets in 2019.
Sabeco’s (SAB) stock price has increased by more than 10 per cent since the beginning of this year, closing Tuesday at VNĐ258,500 per share.
Sabeco still pays cash dividends every year. In its consolidated financial statement for the second quarter of 2019, the company had VNĐ5.3 trillion in cash and cash equivalents, with money estimated at VNĐ1.59 trillion and cash equivalent at 3.7 trillion.
Saigon Beer Western JSC (WSB) also reported positive business results in the first six months. Second quarter revenue reached VNĐ266 billion, up 10 per cent year-on-year, and revenue reached VNĐ514.6 billion, up 9 per cent.
The company’s gross profit margin in the first half reached over 20 per cent, a significant increase compared to the same period last year.
Six-month post-tax profit touched VNĐ84.3 billion, up 27.4 per cent against last year. First half’s earnings per share (EPS) reached VNĐ4,925.
In 2017, Saigon Beer Western JSC (WSB) paid cash dividends at a relatively high rate of 50 per cent, plus a further 40 per cent in 2018.
WSB’s undistributed after-tax profit was VNĐ230 billion, while charter capital was only VNĐ145 billion.
Due to this huge saving, WSB has attracted many investors who prefer stability and cash dividends.
On the stock market, there are also other beer enterprises with small capital scale but good business performances and high dividend payout ratios.
HaLong Beer Beverage Joint Stock Company (HLB) has charter capital of only VNĐ30 billion, but in 2018 it paid a dividend of up to 200 per cent, of which 100 per cent was paid in cash and the rest in stocks. In 2017, the company paid a 110 per cent dividend in cash.
Hà Nội – Hải Dương Beer JSC (HAD), with charter capital of VNĐ40 billion, paid a dividend of 20 per cent in 2018.