Vietnam: Breweries of the Vietnam Alcohol Beer and Beverage Association have decided to pass the tax on to consumers by raising the selling beer prices by 10 % from early 2004, Vietnam News Agency wrote on January 2.

The increased price will help breweries cover the higher production cost when the amended laws on Special Consumption Tax, Value Added Tax (VAT) and Corporate Income Tax take effect on January 1, said Nguyen Van Hung, Deputy General Secretary of the association.

From early 2004, the special consumption tax rate for canned beer will go up ten percentage points to 75 percent, while that for draught beer is down 20 percentage points to 30 %. Bottled beer is entitled to the same tax rate of 75 percent.

The tax rate on alcohol from 40 degrees or above rises by five percentage points to 75 % and for alcohol from 20 to less than 40 degrees at 30 percent compared to the previous levels of 25-55 %.

At present, breweries pay no VAT as they are already subject to the special consumption tax. When the amended laws come into force, they have to pay both the VAT tariff of 10 % and the special consumption tax.

In fact, "breweries still remain the selling prices and just pass the 10 % VAT to consumers," Hung said. This means breweries will not absorb all the taxes and pass on a certain burden to consumers.

They reason that this price hike aims to help them well fulfill their tax obligations and stabilize the consumption markets, and the common voice also aims to prevent undercutting. Breweries under the association hold a dominant share on the market.

Given the new stance by breweries, many agents have rushed to stockpiling beer to earn higher profit from the price hike.

Tran Minh Triet, sales director of Viet Nam Brewery Ltd., which manufactures two best-selling Tiger and Heineken brands, said his factory has seen orders swelling by 70-80 percent compared to normal months.

"Our factory has to operate three shifts to supply enough beer for buyers," Triet said.

Apart from the reason that customers have high demand for beer during Tet (Lunar new year), many businesses registered to buy beer as gifts for their year-end promotional programmes, he said.-Enditem

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .