Vietnam has approved a steep increase in alcohol taxes, raising the special consumption tax on beer and spirits to 90% by 2031. This move targets public health but poses new challenges for global players like Heineken and Carlsberg, who are responding with factory closures, tax policy suggestions, and a shift toward low-alcohol options.
Vietnam’s Alcohol Tax Surge: Global Brewers Rethink Their Strategy
Vietnam, Southeast Asia’s second-largest beer market, is undergoing a seismic shift in alcohol policy. On June 14, the National Assembly approved a plan to gradually increase the special consumption tax on alcoholic beverages from the current 65% to 90% by 2031.
Under the new law, taxes on beer and spirits will climb to 70% by 2027, a year later than originally proposed, before reaching the 90% threshold four years later. Although this final figure is slightly lower than the initial 100% target floated last year, it marks a significant escalation.
The Ministry of Finance says the aim is clear: to reduce alcohol consumption across the country. Yet the economic consequences are already rippling through the beverage industry.
An Industry Already Under Pressure
Vietnam's beer sector, dominated by global titans Heineken (Netherlands), Carlsberg (Denmark), and domestic firms like Sabeco and Habeco, has been hit hard since the implementation of Decree 100 in 2019. That law enforces a zero-tolerance blood alcohol level for drivers, sharply curbing demand.
According to the Vietnam Beer-Alcohol-Beverage Association (VBA), industry revenue has declined for three consecutive years.
Amid the slump, Heineken temporarily shuttered one of its breweries in Quang Nam Province in June 2024. CEO of Heineken Vietnam, Wietse Mutters, urged Vietnamese lawmakers to reconsider the sharp tax hike, advocating for a gradual implementation and differentiated tax rates based on alcohol content.
Heineken's Countermeasures: Sustainability, Tax Reform, and Non-Alcoholic Options
Mutters also highlighted Heineken’s contributions to Vietnam’s economy. The company has invested over €1 billion in Vietnam, making it the country’s largest Dutch investor. It now accounts for nearly 0.5% of Vietnam’s GDP and supports over 172,500 jobs.
In 2024 alone, Heineken is expected to contribute 12 trillion VND (approximately $485 million) to Ho Chi Minh City’s budget.
From a sustainability perspective, Heineken says 99% of its Vietnamese brewery operations are now powered by renewable energy, achieving a 93% reduction in carbon emissions since 2018. The company aims to reach carbon neutrality by 2030.
In term of policy, Heineken proposes a hybrid tax model combining a fixed fee with a percentage of product value which is a method they argue would reduce the burden on affordable, mass-market beers. The company also suggests taxing drinks based on alcohol content, such as:
- 65% tax for beverages with ≤5.5% alcohol
- Higher rates for stronger drinks
Heineken has already introduced Heineken 0.0, a non-alcoholic beer, and continues to promote its long-running “If You Drink, Don’t Drive” campaign, now in its 16th year in Vietnam.
Carlsberg: A More Measured Approach
Carlsberg has taken a more conciliatory tone. The Danish brewer supports continuing Vietnam’s current value-based tax method, while urging that tax hikes be tied to socio-economic conditions, especially for the next decade. Carlsberg shares this view with local brewers like Sabeco and Habeco.
Though it hasn’t publicly downsized operations like Heineken, Carlsberg defied industry trends by growing its domestic market share by 8% in 2023, even as the overall sector declined.
Not Just Alcohol: Sugary Drinks Targeted Too
In the same legislative session on June 14, Vietnam’s National Assembly also approved a new tax on sugary drinks with over 5 grams of sugar per 100ml. This sugar tax will begin at 8% in 2027 and increase to 10% in 2028, signaling broader government efforts to reshape consumer health behavior.