Heineken closes factory in central Vietnam due to weak markets

Heineken Vietnam Brewery Limited Company, or Heineken Vietnam, has suspended operations at its factory in central Quang Nam province since June 12, citing numerous problems in the local market.

In a statement on Monday, the provincial People’s Committee quoted Heineken Vietnam as saying that the beer industry is facing significant challenges following Covid-19 due to the economic slowdown, which has led to a decline in consumer confidence and demand.

In addition, the enforcement of Decree 100, which requires zero tolerance for alcohol while driving, has led to changes in customer behavior. As a result, the Vietnamese beer market recorded a double-digit decline in 2023 and has continued to record a single-digit decline so far this year, Heineken said.

The aim of closing the Quang Nam brewery is to find optimal solutions for the assets, it said.

The company said it needed to streamline its operations to continue investing and developing in the host country. The affected employees would be transferred to other Heineken Vietnam factories or laid off with the best possible benefits.

Heineken Vietnam, a joint venture between Heineken and the state-owned Saigon Trading Group, has been operating in Vietnam since 1991 and has invested over one billion euros (1.07 billion dollars) in the country.

The company operates six breweries in Vietnam and employs around 3,000 people. The Quang Nam branch, which has been in operation since 2007, is the smallest of the six plants.

Before Covid-19, the Heineken factory in Quang Nam contributed VND1 to 1.2 trillion (US$39.28 million to 47.14 million) to the provincial budget annually. However, after the pandemic, this amount has decreased, reaching only VND20 billion (US$785,590) in the first quarter of 2024.

According to the Statistics Bureau, Vietnam’s beer output in the first quarter was 1.02 billion liters, a decrease of 4.1% year-on-year.

Heineken’s latest investment in Vietnam took shape in November 2022 when the company signed a letter of intent to invest an additional $142 million in its brewery in Ba Ria-Vung Tau province, increasing the brewery’s capacity from 11 million hectoliters (hl) to 16 million.