Foreign firms winning in battle for Vietnam’s soft drinks market
According to a report released by the Vietnam Beverage Association, the foreign sector has gradually been edging out domestic competitors.
The association’s chairman, Nguyen Van Viet, said indigenous Vietnamese companies have been struggling from a lack of finance and human capital.
Foreign manufacturers, including PepsiCo’s dominant Aquafina and Nestlé’s La Vie, now dominate the bottled water market, with an 80% share.
Also 80% foreign controlled by foreign companies, the ready-to-drink tea market is led aggressively by Suntory, with its a 30% market share—driven largely by the company’s ability to demonstrate strict Japanese quality standards.
Last year, Suntory announced it would invest US$87.5m in Vietnamese operations over four years. New factory lines were planned to boost capacity by 60% to roughly 200m cases of tea per year.
The Japanese drinks company cannot boast a long history in Vietnam: it only entered the market in 2013 through a joint-venture with PepsiCo, and continues to manufacture the American drink and snack major’s products under licence. It now has five factories in the country.
Vietnamese consumers are increasingly aware of health issues, leading to a perceivable shift in preference towards more nutritious drinks, such as 100% juice, beverages with less or no sugar, and reduced-caffeine beverages, Viet said.
And with improving average disposable incomes, many consumers have become more willing to pay extra for healthier products.
The VBA predicted that the non-alcoholic segment would continue recording positive retail growth, albeit at a slower rate than it has increased over the last five years as the market is reaching maturity.
Moreover, food-safety and health issues are expected to have an ongoing negative impact on forecast growth performance.
