- Green Growth
- Your Consultant
|Stricter rules on alcohol and drink driving are the talk of the town Photo: Le Toan|
After their afternoon football matches, bank officer Minh Vu and his team like to sit down for a few drinks. But now, with the latest Decree No.100/2019/ND-CP setting huge fines for drink driving, they are quite afraid to stop by for a drink.
“We drank a few beers after every match, but now we just buy beer or wine and take it home,” said Vu. “It is a pity, I prefer going out for drinks because the atmosphere is more fun at a bia hoi or a bar.”
Vu’s case reflects the situation of most men in Vietnam, who are in the habit of sitting down with friends for a few glasses after a day of work. As a result, beer vendors are now talking about unusual silence, instead of the usual hustle and bustle. Besides that, beer producers may be unhappy because their revenue in this Lunar New Year is forecast to be negatively impacted.
Now or forever?
A few days after the decree was released, Hanoi’s popular bar streets like Tang Bat Ho and Lo Duc in Hai Ba Trung district, those in the Old Quarter, Truc Bach in Ba Dinh district, Trung Hoa-Nhan Chinh area, Pham Hung street, and some corners in Cau Giay district were submerged in silence.
The manager of Hai Xom on Tang Bat Ho street said that since the new Law on Prevention and Control of Harms of Liquor and Beer Abuse and the new decree took effect on January 1, the establishment has welcomed far fewer customers.
Vendors like Hai Xom previously welcomed hundreds of customers every day, the manager said. “Everything has changed since the new code came into force. The number of patrons has dropped by 50-70 per cent.”
In Hanoi, the transport police have already fined 84 drivers and impounded four cars and 80 motorbikes. Of these, 18 cases were penalised at the highest level, including four car drivers and 13 motorbike and electric bike riders.
Another case, Prague Pub at 7 Ta Hien only had a few customers last week. According to the staff, there has been a noticeable drop in customers during the whole week. However, the reason may not be the new decree as most patrons at the pub are usually foreigners. “We need to wait and see what caused the lull.”
Indeed, the time of quiet comes on the heels of the two big holidays of Christmas and the New Year, with people having had their fill of parties – which could easily cause a drop in the ranks of bar-goers.
At the same time, news of the regulations are still buzzwords around the Vietnamese populace. While the news remains fresh, it may deter people from going out.
However, sooner, rather than later, they may come to terms with the new penalties and find a working transport alternative – and then it will likely be business as usual.
According to Decree No.100/2019/ND-CP, drunk car drivers shall be fined between VND6-40 million ($260-1,750) instead of the previous fine of about VND19 million ($825) if tests show that alcohol content exceeds 80mg per 100ml of blood or 0.4mg per litre of breath.
Additionally, their licences shall be revoked for 22-24 months compared to just 4-6 months previously. Meanwhile, drunk motorcyclists shall be imposed fines of VND2-8 million ($87-348) and their licences shall be suspended for 22-24 months if tests confirm alcohol content in blood or breath. Drunk cyclists shall be fined up to VND600,000 ($26).
Night-time economy conondrum
Bar landlords foresee a fall in revenue, which does not bode well for the local night-time economy – especially as pubs and bars account for a sizeable chunk of the sector which is still in need of incentives and policies to truly take off.
Across the streets of Hanoi at night, food courts, beer parlours, and bars whose business depends on serving alcoholic drinks are very popular. Along with Vietnam, the night-time economies of other countries are also popular in food and beverage services.
Le Dang Doanh, former director at the Central Institute Economic Management, cited the example of Singapore – a country famous for its strict regulations but still having an active, cultivated night-time economy. “Clubs, beer parlours, and even street food vendors in the country are allowed to run until 1-2am. Other governments, like China, are even more encouraging, offering incentives like longer opening hours for these businesses to promote the night-time economy.”
According to the Ministry of Industry and Trade, the ranks of Vietnam’s middle-income earners grow by 1.5 million a year, with steadily increasing leisure expenditure. A survey by The Conference Board Inc. and Nielsen showed that 43 per cent of Vietnamese consumers’ inactive money goes to entertainment.
Indeed, significant amounts are spent on beer and alcohol. According to the World Health Organization, in 2018, Vietnam ranked 29th in the world in beer and alcohol consumption, with the annual expenditure of $3.4 billion, equalling $300 per person.
Do Van Sinh, member of the Economic Committee of the National Assembly, said that the regulations are completely appropriate for Vietnam. “The laws of many other countries are even harsher, but businesses still survive and even flourish.”
In the short term, the business of bars and pubs in Vietnam will be impacted. Once appropriate alternative means of transport are found, patrons will return to their favourite watering holes, especially when the post-holiday lull is over.
Beer brewers see the drop
According to the latest report from SSI Research, Sabeco will be hard-pressed to maintain double-digit output growth in 2020 due to Decree 100, with a forecast performance of 6-7 per cent in the whole sector instead.
After pouring $5 billion into purchasing Sabeco, Thailand-based Thai Beverage has become one of the biggest foods and beverage companies in Southeast Asia.
At the time, company chairman Charoen Sirivadhanabhakdi expressed strong belief in the Vietnamese market and committed to “make Sabeco the country’s pride.” However, the pledge was made before the Law on Prevention and Control of Harms of Liquor and Beer Abuse and the new decree came into force.
Mikio Masawaki, general director of Sapporo Vietnam, told VIR that the brand does not have any plan to adjust its business strategy, “but we will take it into consideration depending on market movements.”
“We believe that changing consumer habits will lead to a shift in consumption from the ‘on’ channel (in-store purchases) to the ‘off’ channel (home purchases),” added Masawaki.
SSI research also pointed out that the regulations are forecast to seriously affect the output of the whole industry, particularly new and small brands. Big brands like Sabeco and HEINEKEN are looking at muted impacts, and they are expected to be rocked too.
Under the new law, beer advertisements will be restricted significantly. Items with less than 5.5 per cent alcohol content will not be allowed to appear on television between 6pm and 9pm. Moreover, online advertisements of alcoholic beverages will not be allowed to be shown to users under 18 years of age.
Traditionally, beer manufacturers spend a great deal on advertisements in the lead-up to the Lunar New Year. In recent days, television channels have started broadcasting far more beer advertisements, especially in the golden time slot between 8pm and 11pm.
As beer brands now have one hour less of prime time advertisement available to them, competition for advertising blocks may well increase, which could raise advertising costs. Subsequently, companies may have to shoulder larger costs.
Additionally, the new regulations could diminish the effectiveness of media campaigns.
Masawaki from Sapporo Vietnam admitted that advertisement costs before the Lunar New Year are certainly higher. However, this in itself does not put much of a burden on the company.
Notwithstanding, he refused to comment on the narrower advertising window and its impact on Sapporo Vietnam’s advertisement campaigns.
Vu Thi Minh Hanh - Deputy director Health Strategy and Policy Institute
Two-thirds of alcohol-related damage come from indirect impacts. With direct spending of some $3 billion a year on alcoholic beverages in Vietnam, the damage caused by alcohol abuse can climb up to $450 for each person per year. Such high losses are equivalent to those in countries where the average income is 10 times higher than in Vietnam.
There are concerns that limiting alcohol consumption will negatively affect the state budget, but the economy loses $1 billion a year due to traffic accidents caused by driving under the influence, while alcoholic beverage companies only pay about $1.2 billion in taxes. Most importantly, alcohol leads to countless problems for the economy and social security as well.
Thanh Nguyen - Director, Ngoc Long Trading Co., Ltd.
As an importer and distributor specialising in beverage products, the holiday period is always the peak season for our business. Recently, when the laws on alcohol became stricter, we have also decided to change our main products to avoid the effects.
Instead of focusing on spirits and beer products, since the end of the last year we started to invest much more in other products, which we believe would sell better and with higher revenue this year.
So far, our sales performance is growing at a stable rate because we have built up an exclusive customer portfolio who take care of their own health and have a strong sense of responsibility towards society. In addition, most of our clients are middle class and affluent consumers.
Tran Van Minh - Manager, Max Beer Garden
After the new regulations came into effect on January 1, the number of our customers has clearly dropped and we get fewer orders of beer or spirits. Before this, we often had about 300 guests a day, but it is only 100 now. Our revenue also dropped by 50 per cent compared to the same period in 2019. Drinkers now tend to visit places near their houses, which are more convenient to reach on foot or by public transportation.
I think that our restaurant is not the only place to suffer, many other beer parlors are in the similar situation. We will soon set apart some spare space for our customers to keep their vehicles overnight, or have our staff take customers home in case they are under the influence.
Nguyen Tuong Linh - Owner, Glam Lounge
The new drink driving regulations will certainly affect the business of bars, pubs, and lounges like us, at the very least at the first times when the news is fresh. One of the main reasons is that the customers pause and try to find a safe solution to travel after drinking, especially when the biggest holiday of the year, is coming.
Drinking in Vietnam is not only a mere habit but is an integral part of the culture. We are optimistic that the severe penalties will improve people’s awareness when they drink.
In the past few days, we did not see a sharp decrease in the number of our patrons, however, they now arrive by different means.
Most of our patrons now come by taxi or on foot. I also believe that in the near future there will be a rapid growth in public transportation, or new forms of transportation services will be developed.