Sabeco, the brewer of Saigon Beer, saw profits plunge 32% year-on-year to VND1.2 trillion ($50.7 million) in the second quarter as rising competition pumped up its marketing expenses.
Fierce competition with international brewers forced the company to spend more on marketing and distribution, while demand has plunged from last year amid economic challenges, the company explained in its financial report.
The impact of tightened regulations on driving under the influence and rising costs of ingredient and packaging also contributed to the profit drop, it added.
In the second quarter last year Sebeco reported a post-tax profit of VND1.79 trillion, the highest since Thai company ThaiBev acquired it in 2017.
In the first six months this year the company posted a post-tax profit of VND2.2 trillion, meeting 38% of the year’s target.
Earlier this year Sabeco leaders said that Vietnam’s beer industry was seeing a golden opportunity amid rising income and the potential of increasing exports of non-alcoholic beer.
Sabeco therefore targets a revenue increase of 15% to VND40.27 trillion and a profit rise of 5% to VND5.77 trillion, a new peak.
But most analysts have forecast that the company will fail to meet these goals as consumers are tightening their spending amid economic difficulties.
Vietcombank Securities last month forecast that Sabeco will see revenue increasing only 6% this year.
SSI Securities expect its revenue to rise 4.7% and profits 5.2%.