HCM City (VNS/VNA) - Domestic beerconsumption in the second half of the year is expected to improve over thefirst six months, while next year the beer industry can grow by20 percent compared to the low base this year.

Despite progress, beer consumption volume isunlikely to reach the figures recorded before the COVID-19 pandemic,according to SSI Research.  

“We believe that beer consumption volume maytake several years to recover to the levels prior to the COVID-19 outbreak and beforethe promulgation of Decree No.100/2019/ND-CP [which outlines sanctions fordrunk driving that took effect early this year].”

Demand for beer was negatively affected bythe pandemic in the first six months, with consumption volume down by 12.7percent, while consumption of the FMCG portfolio dropped by only 7.3 percent,according to Nielsen's statistics.

According to Nielsen, beer consumption volumein the second quarter dropped by 22.6 percent compared to the same period lastyear. Nielsen's data reflects actual beer consumption, while the revenue ofSabeco (SAB) and other beer brewers in Vietnam reflect figures frombreweries to distribution agents.

The share of beer consumption accounted for20.7 percent of FMCG consumption in Vietnam in the first six months of 2020,slightly down compared to 22 percent last year.

Production output has recovered from May,with an increase of 60 percent compared to the period from February to April.Accumulating output in the first half was down 17 percent over the same periodlast year, according to the General Statistics Office of Vietnam.

The second quarter was the worst quarter forthe beer industry due to the national social distancing measures in thefirst three weeks of April. Beverage businesses stoppedoperation from mid-March to early June. Non-essential businessesin high-risk localities were asked to stop operations again amidthe second COVID-19 outbreak.

SSI Research said Q1 was the worst quarterfor SAB's earnings, as SAB did not promote sales and distribution channelsin Q1. However, its beer consumption in June almost recovered to levels priorto the COVID-19 outbreak.

It also reported higher profit margins thanksto its efforts to cut costs. Similarly, most of the listed beer brewersreported a recovery in Q2.

It estimates that SAB's beer output in 2020will decrease by 30 percent year-on-year. The company’s businessoutcome in the latter half of the year is expected to be better thanthat in the first half of 2020 if there is no social distancing appliedacross the country.

According to the report, COVID-19 has changedthe industry sales structure, with an increase in sales through off-tradechannels (all retail outlets like hypermarkets, supermarkets, conveniencestores, mini markets, kiosks, wines and spirits shops).

“Consumption in off-trade channels willbecome even more important in the following years," SSI Research said.

Thus, beer companies are making efforts toboost sales on off-trade and modern trade channels.

In 2019, total beer production reached morethan five billion litres (up 22.9 percent over the same period in 2018),while consumption reached over four billion litres (up 29.1 percent over thesame period last year)./.