In 2007, the soft drinks market continued to fare more strongly in Vietnam, with growth hitting 8% in both total volume and value terms. Products notably driving the stronger growth were fruit/vegetable juice, bottled water and RTD tea. Generally, the higher disposable incomes of the Vietnamese population over the review period helped boost the performance of soft drinks.
More specifically, consumers are gravitating towards flavour, nutrition and convenience when they choose soft drinks.Increasingly towards 2007, Vietnamese consumers showed signs of paying more attention to health when choosing their soft drinks products, especially amidst more modern lifestyles and less healthy diets.
Whilst various soft drinks products showed very healthy growth in 2007, bottled water had the honour of seeing the fastest growth, with another year of double-digit volume growth. With the lack of potable tap water in Vietnam, the majority of the Vietnamese population has to rely on boiling tap water, with bottled water perceived as a more expensive product meant for middle and upper income consumers.
Nonetheless, the potential for the acceptance of bottled water by the majority of the population is there, and with increasing standards of living, bottled water has enjoyed double-digit volume growth thanks to the expansion of the consumer base towards 2007. While the percentage growth rate has slowed down from its peak in the early review period, the actual increment in volume sales has continued to be highly encouraging, outpacing the growth of any other soft drinks products.In 2007, the fierce competition between PepsiCo Vietnam and Coca-Cola Beverages Vietnam Co Ltd was still the biggest theme of the competitive environment in soft drinks in Vietnam. PepsiCo Vietnam still held on to its overall lead, thanks to its powerful promotional campaigns for its brands in 2007.
While both companies owed their top positions to carbonates being the most popular soft drinks product in Vietnam, they have seen their shares decrease on an overall market level due to the poorer performance of carbonates compared with other soft drinks products, which have a healthier, more favourable image.In comparison, bottled water companies, which trail the two big giants in carbonates, showed improved volume shares towards 2007, due to the strong showing of bottled water. The on-trade channel experienced stronger volume growth compared with off-trade in 2007, continuing a trend that started in 2005. While the off-trade infrastructure for soft drinks in Vietnam was improved in 2007, which led to stronger growth, a more significant increase was seen in the on-trade channel.
This situation is attributable to a more dynamic consumer foodservice industry, with not only new outlets being opened in more diverse locations, but also more chains entering the country, which helped to boost sales of soft drinks through on-trade outlets. Further improvement to volume growth is still expected in the soft drinks market over the forecast period, with the total volume CAGR expected to reach 9%.This bright outlook will stem from various favourable factors, ranging from growing disposable incomes of Vietnamese consumers and more soft drinks brands to more companies in neighbouring countries entering Vietnam, as well as massive potential from the low 2007 per capita consumption itself. On that note, the soft drinks market in Vietnam is still very lucrative and promising for all players.
In order to boost sales of soft drinks, manufacturers of soft drinks have gradually moved towards more specific positioning of their products into certain consumer groups.Specifically in carbonates, aiming to avoid big giants in urban areas, some brands, such as Tribeco, Chuong Duong, Number 1 and Bidrico are looking for consumers with low disposable incomes in remote areas and rural regions, whilst Coca-Cola is aimed towards family consumers with a focus on big plastic packaging. Moreover, the majority of fruit/vegetable juice is orientated towards housewives, who care most about their family’s health, except some brands, for instance B Natural, TriO, and Fresh, which are aimed at the white-collar community, with convenience packs.In addition, there is a trend towards functional drinks targeted towards women, in particular Lipovitan Beauty for Ladies.
Moreover, concentrates are orientated not only towards high-income consumers via juice bars, for example Teisseire liquid, but also towards people who want to consume low sugar products, principally Nestea Lemon Lite powder. On balance, most segmentation in the market is as a strategy for companies to gain more share of the soft drinks market.
Cite this Vietnam Soft Drinks Essay
Vietnam Soft Drinks Essay. (2017, May 11). Retrieved from https://graduateway.com/vietnam-soft-drinks/