In the increasingly fierce competition among brewers, the two Vietnamese leading brewers, Habeco and Sabeco have spent millions of dollars on advertisements, which is considered a critical factor to gain market share.
According to its semi-annual report, Habeco, the owner of Hanoi beer trademark spent VND223 billion (equivalent to US$9.8 million) on advertisement and promotional campaigns, doubling the same period last year and equaling 75 per cent of 2016.
Similarly, in the first six months, Sabeco, the owner of Saigon beer trademark spent over VND790 billion (roughly US$34.8 million) on advertisements, promotion, and communications programs, increasing to 73 per cent year-on-year and accounting for more than half of the total sales expenditures.
However, Habeco's revenue, in the first half of this year, only reached VND4,226 billion (approximately US$186.2 million), up 5 per cent year-on-year. After-tax profit decreased slightly to VND323 billion (equivalent to US$14.2 million).
Regarding Sabeco, its revenue in the first six months reached VND15,779 billion (roughly US$695.4 million), up to 7 per cent year-on-year. The expenditure for advertisement is making Sabeco’s profit increase slightly to 3,000 billion (approximately US$132.2 million).
Theoretically, when firms increase spending on advertisements, their business results will be improved. However, in reality, the efficiency has been decreasing.
Sabeco’s revenue was 50 times higher than its expenditure for advertisement, promotion, and communications programs in 2012; however, in the first half of 2017, the figure was 20 times only.
Similarly, in 2014, Habeco's revenue was 54 times higher than its expenditure for advertisement; however, in the first six months of 2017, the figure was 19 times only.
Currently, Sabeco and Habeco are accounting for 60 per cent of market share. The participation of foreign brewers heats up the competition in the beer market in Vietnam.
If firms do not invest in promoting their brand continuously, they will lose their market share. Therefore, that firms have spent millions of dollars a year on advertisement and marketing their brand image is understandable, according to industry experts.
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