Vietnam liquor maker makes a loss, 4 years in a row
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Nation’s leading liquor maker Halico has reported a loss of VND75 billion ($3.22 million) for 2018. With Vietnamese consumers moving towards foreign brands, the 120-year-old liquor maker, in which Vietnam’s second biggest brewery Habeco has 54.29 percent ownership and British multinational Diageo holds a 45.5 percent stake, Halico has reported losses for the fourth year in a row.
It reported a loss of over VND20 billion ($859,780) in the fourth quarter of 2018, raising the total annual loss to VND75 billion ($3.22 million).
In its annual statement for 2018, Halico’s board expressed doubts that the company can continue operating, with Vietnamese consumer tastes shifting to imported beer and foreign alcoholic products. It conceded that it has failed to capture younger consumer segments.
In addition, Diageo has been unable to negotiate any substantial supply contracts with foreign partners, so the company has not been able to do well in exports.
Furthermore, management costs have risen to over 60 percent of revenue. Despite a 30 percent rise in sales in 2018 (VND155 billion or $6.66 million), the difference was not able to compensate for expenses incurred.
The Hanoi Liquor Joint Stock Company was originally a Hanoi winery, founded in 1898 and equitized in 2004 with initial charter capital of nearly VND50 billion ($2.15 million).
In early 2011, Diageo Plc, a British multinational alcoholic beverages company, acquired an 18.67 percent stake in Halico for a total of VND800 billion ($34.4 million) from investment fund VinaCapital.
Diageo is the world’s biggest liquor company, owning famous brands such as Johnnie Walker, Bailey and Smirnoff. It bought another 26.83 percent stake in 2012, hoping to cash in on the growing consumer market.
Halico’s accumulated losses at the end of last year topped VND330 billion ($14.19 million), 1.6 times higher than its current charter capital at VND200 billion ($8.6 million).
Questions & Answers
Q.What is the primary reason Halico's board doubts the company can continue operating?
What is the primary reason Halico's board doubts the company can continue operating?
The board expressed doubts because Vietnamese consumer tastes are shifting to imported beer and foreign alcoholic products, and the company has failed to capture younger consumer segments. Management costs have also risen significantly.
Q.Did Halico's sales increase in 2018, and if so, was it enough to cover expenses?
Did Halico's sales increase in 2018, and if so, was it enough to cover expenses?
Yes, Halico saw a 30 percent rise in sales in 2018, reaching VND155 billion ($6.66 million). However, this increase was not sufficient to compensate for the expenses incurred by the company.
Q.What is the current total amount of accumulated losses for Halico, and how does it compare to their charter capital?
What is the current total amount of accumulated losses for Halico, and how does it compare to their charter capital?
Halico's accumulated losses at the end of last year totalled VND330 billion ($14.19 million). This figure is 1.6 times higher than the company's current charter capital of VND200 billion ($8.6 million).
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