Vietnam outlines ambitious plans to double beverage exports to $900m between 2020 and 2035

By Lester Wan

- Last updated on GMT

The targets cited include beer, alcohol (which includes industrial alcohol) and non-alcoholic beverages to reach an export turnover of US$450m by 2020. ©GettyImages
The targets cited include beer, alcohol (which includes industrial alcohol) and non-alcoholic beverages to reach an export turnover of US$450m by 2020. ©GettyImages
The Vietnam Beverage Association (VBA) has backed official plans to double the value of the nation’s alcohol and soft drinks exports between 2020 and 2035.

The Ministry of Industry and Trade has set targets for exports to hit $450m by 2020, before achieving US$900m by 2035.

The Ministry had said its aim was to make Vietnam’s beer–alcohol–beverage industry a modern one “with famous brand names in the market and high quality products”​, in part to greater meet domestic consumption and export demands.

Developmental targets

The targets cited include total production of beer, alcohol (which includes industrial alcohol) and non-alcoholic beverages to reach 4.1 billion litres, 350 million litres and 6.8 billion litres respectively, by 2020, yielding an expected export turnover of US$450m by then.

The current expected “average growth rate of the value-added of the whole industry”​ is 5.8% per year from 2016 to 2020.

Ultimately, the goal is export turnover of US$900m by 2035.

Nonetheless, Nguyen Van Viet, chairman of the VBA, said that to realise this growth and target, Vietnam’s beverage industry needs long-term and stable policies, which must be practical to “avoid impact on the industry’s business operations”​.

The Ministry stated that the beer–alcohol–beverage industry would be developed “bybalancing the production and consumption between regions nationwide in order to ensure the mutual benefit of the government, society and enterprises”​ as well as “by adopting advanced technologies and equipment, improving technologies to increase the quality of products, and producing new products with high quality and diverse types to meet domestic consumption and export demand, and improve the competitiveness in the global integration”​.

The Ministry also stated it would have a greater emphasis on sustainable development and “attach a special importance to the food safety and protection of ecological environment​”.

The Hanoi Times​ stated that Vietnam’s beverage industry has been growing well, with the soft drink sector having grown about 6.6% per year from 2011 to 2016 and the beer sector having “caught up with global trends”​.

Moreover, the industry is said to have created more than 50,000 jobs and contributes to about 3% of the state budget.

Current beverage situation

At Fi Vietnam recently, Huynh Bich Tran, associate director of Retail Measurement Services, Nielsen Vietnam, said the Vietnamese food and beverage industry is seeing strong growth along with rising incomes in the country.

In terms of the value contribution to Vietnam’s FMCG sector, beer and non-alcoholic beverages each constitute almost 20%. For the total value growth in 2017 compared to 2016, the top two FMCG categories are beer (10%) and non-alcoholic beverage (7%).

Nonetheless, beverage growth in Vietnam has been limited by a number of food safety scandals such as a fly in a bottle of Number 1 energy drink by Tan Hiep Phat Co Ltd as well as contaminated ingredients or visible impurities in drinks, including in that of the same company.

On top of food safety, Huynh said health is a visible trend. She said 83% of Vietnamese consumers actively make dietary choices to prevent bad health conditions, 89% are willing to pay more for foods that promote health benefits, and 88% read packaging labels carefully for nutrition content.

According to the Hanoi Times​, beverage firms, including Coca-Cola, have also been reformulating to cater to consumer demand for healthier drinks.

Further development

For beer, the Ministry said the focus will be on adopting modern technologies and equipment to improve product quality and minimise consumption of raw materials and fuels, as well as for businesses to associate or merge into large-scale enterprises.

Furthermore, beer firms would be encouraged to produce alcohol-free beer and luxury lines of beer with a competitive price, in order to boost exports.

For alcoholic beverages, the focus is to build up national brands, “step by step”​. The Ministry said this can be done through improving cooperation with foreign large-scale alcohol companies in producing high quality alcoholic products in order to (eventually) replace imported alcoholic products, and for export.

Wines and fruit brandies will also be produced in association with the development of local raw material areas.

For non-alcoholic beverages, stakeholders hope to encourage the economic sectors to invest in the production of beverage products using large-scale and modern technologies and equipment in order to ensure food safety and environmental protection.

The production of beverages from fresh fruits as well as other nutritious beverage products using domestic materials will also be encouraged, along with the production of more natural mineral water products.

However, local media reported that the beverage industry still faces difficulties, including in high inventory rate and shortcomings in business management policy.

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