Dateline Southeast Asia

Vietnam's fizzy drinks market going great guns as category escapes tax

By RJ Whitehead

- Last updated on GMT

Vietnam's fizzy drinks market going great guns as category escapes tax

Related tags: Soft drinks, Soft drink, Vietnam

While consumers have been curbing their intake of carbonated drinks in many markets, in Vietnam soft drinks consumption looks set to break the 1bn litres barrier this year.

A report by Canadean has found that the country’s carbonates landscape has expanded rapidly over the last few years, from 587m litres in 2010 to 836m litres in 2014 at an annual rate of 9.2%. 

The growth is due to rising population, increasing incomes and the development of an important consumer group: the young urban professional. 

The pace of urbanisation is high and over half the population in Vietnam is under 35 years old, which gives another huge demographic push to the carbonates category​,” said Canadean analyst Erica Shaw.

Trading conditions are favourable for international companies looking to invest in Vietnam, now that carbonates have exempted from a new tax that has been applied and increased on other goods, including cigarettes, beer and spirits. 

The government’s decision against adding a special consumption tax on carbonated soft drinks gives an extra green light for companies wishing to invest in carbonates in Vietnam​,” said Shaw.

Last year saw the launch of several new products aimed at young urban consumers, including Tropicana Frutz from Suntory PepsiCo Vietnam Beverage. The drink, available in apple and trendy “cocktail” flavours, and sold in a jazzy and easily transportable 33cl PET bottle, taps into Vietnam’s street-style culture. 

Coca-Cola Sabco has also also successful in combining international campaigns with local needs, with its “happiness truck​” featured in promotions during Tết, the Vietnamese New Year. 

During this holiday, gifts of food and drinks are traditionally exchanged, making it the perfect occasion for promoting soft drinks​,” said Shaw.

Even though the Vietnamese market is responding to health awareness, with low calorie options such as Coca-Cola Light proving popular, regular carbonates are driving growth at the moment. 

Moreover, fast food chains are increasingly present in cities, where eating out is growing alongside an improving economy. 

McDonald's has just entered the market place, a move that will also help carbonates to expand further. 

The global giants have an overall dominant influence and set the trends, which the rest of the market has to follow​,” said Shaw. 

Brunei to investigate rise of NCDs in the country

Brunei’s health ministry has embarked on its biggest research project into non-communicable diseases, having selected at random  1% of the tiny Borneo nation’s population.

The 4,321 subjects taking part in the six-month study are doing so voluntarily, though Dr Zainal Ariffin bin Haji Yahya, general director at the Ministry of Health, said he hoped “those who are selected will cooperate with the data collectors for the success of this survey​.”

The information obtained from it will be used to assist the ministry to assess and improve its preventative measures to control non-communicable diseases, including heart disease, cancer and stroke, in the country. 

The overall results of the survey will be shared to the public via research publications, health talks and factsheets.

Non-communicable diseases represent the top cause of death in Brunei, according to ministry figures.

In 2012, 50.8% of male and 54.4% of female deaths in the country were a result of these diseases, compared to 48.8% of men and 38.3% of women in 2008.

This shows a drastic increase that requires immediate action from a number of agencies​,” the health ministry said.

Vietnamese ‘ignore nutrition’, health institute warns

Most Vietnamese do not pay attention to nutrition, according to one of Vietnam’s top health officials. 

Nguyen Thi Lam, deputy director of the country’s National Institute of Nutrition, said: “Nutrition awareness is lacking among people with low incomes and those who are better off. The rich often eat a lot of food, but with little nutrition, while some children suffer from malnutrition and rickets because their mothers lack the knowledge to raise their babies properly.” 

A recent survey by the institute found residents in the countryside consume 200g of vegetables a day on average, a figure that is half of what the World Health Organisation recommends.

This figure was unchanged from 1985, when Vietnam was going through a dramatic food shortage.

However, the nutrition institute’s Le Bach Mai said the amount of starch consumed daily in the country has doubled in the last decade from 16-33g per person.

According to institute figures, 43% of cancer cases in Vietnam are related to food consumption. These include the consumption of unsafe food, poor nutrition and improper food processing.

Weakening rupiah giving food industry a dilemma

Indonesia’s food and beverage companies have been suffering from the recent depreciation of the local currency, which now stands at a low of below Rp14,000.

The dilemma is that it is unlikely for food and beverage producers to increase selling prices in the current condition. People’s purchasing power is also under pressure​,” Stefanus Indrayana, of the Indonesian Food and Beverages Association (GAPMMI), said at a discussion in Jakarta.

The rupiah has been weakening alongside slowing economic growth, which is down to 4.7% for the first-half of this year, and declining people’s purchasing power.

The fluctuating currency has been hampering companies’ ability to plan ahead, Stefanus said. To solve the problem, business players must be more selective in choosing product components.

Just classify imported and domestic products. If there are components that could be substituted, just substitute them. We have a high supply of domestically-produced crude palm oil, and its price is falling. For electricity sources, we could choose either gas-fuelled power plants or coal-fired power plants​,” he said.

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Healthy snacks and carbonated drinks

Posted by Iram Gharaba,

We are import and marketing company from Israel and we are looking for best quality in food and drinks fields.

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