CGS International
June 16, 2025

Vietnam Defers Beer Excise Tax Hike: What It Means for Thai Beverage and Industry Peers

Introduction: Vietnam’s Tax Change Offers Relief to Beverage Sector

Vietnam’s National Assembly has approved a significant change to the proposed schedule for excise tax hikes on beer, offering much-needed breathing room to beverage companies operating in the country. This development has direct implications for Thai Beverage (THBEV), its subsidiary SABECO, and a broad array of regional and global peers in the spirits, beer, and non-alcoholic beverage segments.

Key Highlights

• The special consumption tax on beer in Vietnam will remain at 65% through 2026 and then increase by 5 percentage points annually, reaching 90% by 2031.
• This phased approach is more gradual than the Ministry of Finance’s earlier proposal, which aimed for an 80% rate by 2026 and 100% by 2030.
• THBEV is expected to pass most of the tax burden to consumers, resulting in estimated annual average selling price (ASP) increases of around 3% through 2031.
• A new 8% tax on sugary beverages (with more than 5g sugar per 100ml) will start from 2027, but THBEV’s exposure here is minimal.
• CGS International reiterates an Add rating on THBEV with a target price of S\$0.56, representing a 21.7% upside from the current price.

Vietnam’s Phased Excise Tax Hike: Gradual, Not Abrupt

• On June 14, 2025, the Vietnamese National Assembly approved a phased-in excise tax increase for beer, maintaining the current 65% rate in 2026 and raising it by 5 percentage points each year, reaching 90% by 2031.
• This approach is notably less aggressive than last year’s Ministry of Finance proposal, which targeted 80% in 2026 and 100% in 2030. The change aims to help consumers gradually adjust to higher prices.

Implications for THBEV and SABECO: Margin Management and Competitive Pricing

• THBEV’s Vietnam subsidiary, SABECO, is positioned to offset the tax increase by incrementally raising beer prices—about 3% annually through 2031, assuming full pass-through to consumers.
• This tax schedule is less disruptive than initially feared—previous projections saw a 9% front-loaded ASP impact by 2026, followed by a 3% CAGR in price increases from 2026 to 2030.
• The more gradual implementation grants SABECO flexibility in 2025 to respond to current downtrading trends with more competitive pricing.
• Updates on THBEV’s strategy are expected at its Annual Information Meeting on June 20, 2025.
• The new 8% tax on high-sugar beverages, effective from 2027, will have negligible impact on SABECO, as non-alcoholic beverages contributed less than 1% of FY24 revenue.

THBEV: Valuation, Financial Performance, and Outlook

• CGS International maintains an Add rating on THBEV, citing that current valuation (approximately 9.7x forward P/E) is the lowest in five years and more than 1.5 standard deviations below the five-year mean—even as the broker projects an 8% core EPS CAGR from FY25 to FY27.
• Potential re-rating catalysts include stronger margins from cost controls and volume increases from downtrading in Vietnam. Downside risks include prolonged macroeconomic weakness and higher SG&A expenses.

Peer Comparison: Spirits, Beer, and Non-Alcoholic Beverage Companies

Spirits Companies

Simple average (Spirits): 15.9x P/E CY25F, 21.6% ROE, 4.2% dividend yield

Beer Companies

Simple average (Beer): 18.1x P/E CY25F, 29.0% ROE, 4.4% dividend yield

Non-Alcoholic Beverage Companies

Simple average (Non-Alcoholic Beverages): 21.8x P/E CY25F, 28.5% ROE, 3.0% dividend yield

THBEV: By the Numbers—Financials and Key Ratios

THBEV Key Volumes

• Spirit volume (m litres): 637.8 (Sep-24A), 637.8 (Sep-25F), 647.4 (Sep-26F), 653.8 (Sep-27F)
• Beer volume (m litres): 2,314.1 (Sep-24A), 2,418.3 (Sep-25F), 2,519.4 (Sep-26F), 2,584.8 (Sep-27F)
• Non-alcoholic beverage volume (m litres): 3,218.9 (Sep-24A), 3,380.1 (Sep-25F), 3,534.7 (Sep-26F), 3,650.1 (Sep-27F)

Shareholder Information and Market Performance

• Major shareholders: Sriwana Co Ltd (56.8%), Maxtop Management Corp (7.1%), Capital Group Companies (5.0%)
• Market cap: US\$9,006m / S\$11,560m
• Free float: 29.3%
• Current price: S\$0.46, Target price: S\$0.56, Upside: 21.7%, Dividend yield: 5.6%
• 1M/3M/12M Price Performance: -7.1% / -9.8% / -4.2% (absolute); -8.8% / -14.0% / -33.6% (relative)

Conclusion: Outlook for THBEV and Sector Peers

The delayed and phased excise tax increase in Vietnam represents a material positive for THBEV and its Vietnam subsidiary SABECO, providing the company with operational flexibility and time to adapt pricing strategies. With its current valuation at multi-year lows, strong dividend yield, and resilient profit outlook, THBEV stands out as an attractive play in the Asia-Pacific beverage sector. Peer analysis reveals a diverse landscape, with THBEV’s fundamentals holding up well against both regional giants and global competitors in spirits, beer, and non-alcoholic beverages. Investors should watch for updates following THBEV’s upcoming Annual Information Meeting for further clarity on management’s response and growth strategies.