- In a bid to curb alcohol consumption, Vietnam recently announced that it would increase its special consumption tax on beer and other alcoholic beverages to 90% by 2031, affecting domestic beer products such as Thai Beverage.
- - Read this at SGinvestors.io -
Higher alcohol tax.
- It was recently announced that Vietnam’s National Assembly approved a proposal to raise the special consumption tax on alcoholic beverages to 90% by 2031. Under the approved legislation, the tax rate on beer and strong liquor would increase by 5ppt annually from the current 65% to 70% by 2027 and eventually to 90% in 2031. The tax rate on liquor with less 20% of alcohol content would also increase by 5ppt annually from the current 35% to 40% by 2027 and eventually to 60% in 2031.
- - Read this at SGinvestors.io -
Negative blow to an already challenging market.
- With the beer sector in Vietnam already suffering from low volumes due to stringent drink-driving laws introduced in 2019 coupled with changing domestic preferences, we reckon that the higher alcohol tax would negatively impact beer consumption volumes in the medium-long term, affecting beer producers such as Thai Beverage's Vietnam subsidiary, Sabeco.
- Furthermore, as the ongoing global macroeconomic uncertainty persists, we expect weakening domestic demand to stay muted/soften, leading to lower revenue and profitability for domestic beer producers.
Expect higher prices.
- Read more at SGinvestors.io.
