New Race In Beverage Market Starts

The Vietnamese beverage market remains attractive to investors

Kido, a consumer goods manufacturer, recently announced a plan to join the beverage market with herb tea, milk tea, corn milk and bottled green soy milk. 

Tran Le Nguyen, CEO of Kido, said the group is wrapping up procedures to join forces with a Thai partner to develop products.

In the first phase, the Thai partner will make products in Thailand, while Kido will be in charge of distributing the products. In the second phase, Kido will set up a factory in Vietnam.

Kido intended to jump into the beverage market many years ago as the group’s leadership saw the big potential of the market. In 2000s, Kido took the first step in the market by acquiring a stake in Tribeco. 

The deal failed, but gave Kido’s managers deep knowledge about the market, which helped them return later.

The Ministry of Industry and Trade (MOIT) reported that there are more than 1,800 enterprises in the beverage industry. 

Meanwhile, BMI, a British market analysis firm, predicted the two-digit growth rate for the Vietnamese beverage market, and a report of the Vietnam Beer, Alcohol & Beverage Association (VBA) showed that Vietnamese consumes 23 liters of soft drink a year per capita.

According to Uday Shankar Sinha, CEO of Suntory PepsiCo Vietnam, the Vietnamese market attracts investors from the US, France and Japan. In some other Asian markets, investors expect growth rate of 2 percent, while in Vietnam, they expect the 6-7 percent growth rate.

The investment capital Suntory PepsiCo poured into the Vietnamese market in 2013-2017 was even higher than the total investment capital in the previous 10-year period.

The company now has five factories, 3,000 workers, 450 distribution points and over 1.1 million retail points. Ten years ago, Suntory PepsiCo had a distribution network with 25,000 refrigerators, but the figure has soared to 65,000. 

It plans to obtain turnover of $1 billion this year, following steady two-digit growth rate over the last 12 years.

Coca-Cola Indochina marketing director Pham Nha Uyen said since 2013 the manufacturer has been heavily investing in production lines to increase productivity. A smart factory will be put into operation soon.

Regarding market share, a survey by Nielsen in December 2017 found that Vietnamese brands are keeping an upper hand in the food and beverage sectors with 69 percent and 45 percent market share, respectively. 

The heavy investment made by foreign powerful corporations has put pressure on Vietnamese manufacturers. However, Vietnamese brands still dominate in some kinds of product categories.

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