LATROBE UNIVERSITY

SOFT DRINKS IN
VIETNAM
MKT1MDP

Tutorial name: Mr. Son Ngoc Ho

Thi Thuy Luong Student ID: 20400919

20/04/2019
Word count: 1698

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EXECUTIVE SUMMARY
MARKET VALUE

The Vietnam soft drink market value was estimated nearly 75.572 trillion VND in 2013.

MARKET VALUE FORECAST

The Vietnam Non – alcoholic beverages market has predicted by BMI to arrive at a value of 83.484 trillion in
2014.

MARKET VOLUME

Vietnam soft drinks market volume increased from 1820 million litres in 2011 to nearly 2044.14 million litres
in 2013. On the opposite trend, the growth rate declined 1.89% from 2011 to 2013.

MARKET VOLUME FORECAST

Vietnam soft drinks market has forecasted by BMI to grow by 7.76% to hit the volume 2969.08 million litres in
2018.

CATEGORY SEGMENTATION

RTD tea drinks is the largest segment of the soft drinks market in Vietnam, accouting for 58%

MARKET SHARE
In 2013, PepsiCo was the leading supplier in the Vietnam Non – alcoholic beverages market accounting for
25.5% of the market.

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TABLE OF CONTENTS
EXECUTIVE SUMMARY 1
MARKET VALUE FORECAST 1
MARKET VOLUME 1
MARKET VOLUME FORECAST 1
CATEGORY SEGMENTATION 1
MARKET SHARE 1

INTRODUCTION 5

SOFT – DRINKS MARKET IN VIETNAM –OVERVIEW 6

MARKET DATA 7
MARKET VOLUME 8

MACRO ENVIRONMENTAL ANALYSIS – PESTLE 9

SOCIAL 9
ECONOMIC 12

MARKET SEGMENTATION & TARGETING 13

MARKET SHARE 14

MARKET DISTRIBUTION 15

MARKET OUTLOOK 16
MARKET VOLUME FORECAST 17

RECOMMENDATION: 18

CONCLUSION 20

REFERENCE LIST 21

APPENDIX 22

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LIST OF TABLES

Table 1: Vietnam Soft drinks market value: VND trillion, 2011-2013 7

Table 2: Vietnam Soft drinks volume: litres mn, 2011 - 2013 8

Table 4: Vietnam soft drink market category segmentation: VND trillion, 2013 13

Table 5 : Vietnam soft drinks market share: % share, by value, 2013 14

Table 6: Vietnam Soft drinks market value forecast: VND trillion, 2014-2018 16

Table 7: Vietnam Soft drinks volume forecast: litres mn, 2014- 2018 17

Table 8: Sales of RTD tea drinks, trillion VND 2010 – 2015 19

3
LIST OF FIGURE
Figure 1: Vietnam Soft drinks market value: VND trillion, 2011-2013 7

Figure 2: Vietnam Soft Drinks market volume: litres mn, 2011 - 2013 8

Figure 3: Vietnam Population Pyramid 2013 9

Figure 4: Social Frame Work 2014 10

Figure 5: The priority concern of Vietnamese People 11

Figure 6: GDP growth and inflation 2011 - 2019 12

Figure 10: GDP growth rate ranking in Asia – pacific 2014 12

Figure 11: Soft drink market category segmentation 2013 13

Figure 12: Vietnam soft drinks market share: % share, by value, 2013 14

Figure 13: Soft drinks market distribution: % share, by value, 2014 15

Figure 14: Vietnam Soft drinks market value forecast: VND trillion, 2014-2018 16

Figure 15: Vietnam Soft Drinks market volume forecast: litres mn, 2014- 2018 17

Figure 16: Factors effecting on nutritional goods decision 18

Figure 17: Sales of RTD tea drinks, trillion VND 2010 - 2015 18

4
INTRODUCTION

Vietnam has not only an attractive soft drinks market but also a significant progress.
In this report, I will use PESTLE analysis to analyses the Vietnam market to help the investors has an overall
picture.

5
SOFT – DRINKS MARKET IN VIETNAM –OVERVIEW
DEFINITION

Carbonates, squash/syrups, nectars, energy drinks, juice, packaged water, functional drinks, iced/RTD tea
drinks, flavored water, fruit powders, bulk/HOD water, and iced/RTD coffee drinks is the retail sale consisted
of the soft drink market.

MARKET ANALYSIS

Soft drinks market value and volume are quite noticeable. Market value and volume of Vietnam non –
alcoholic beverages market has reached 75.572 trillion VND and 2044.14 million litres respectively.
This market growth is mostly backed by young population, health conscious and the GDP was recognized to
develop and reach maturity at a constant speed while the inflation was restrained.
RTD tea drinks accounts the highest segmentation with 58%.

6
MARKET DATA
MARKET VALUE
By BMI (2014), the Vietnam soft drink market value was estimated nearly 75.572 trillion VND in 2013.
By Brands Vietnam (2016) the Vietnam Non – alcoholic beverages market reached to 80.320 trillion in 2014.
Additionally, the annual growth rate of the market between 2010- 2014 was 13.48%. The growth rate speed
had decline noticeably.

However, in the phase of economic crisis (between 2008 and 2013), the compound annual growth rate
(CAGR) in the 4- year period (from 2009 to 2013) was 19.35% per year – opposite to another industry
(VietinBankSc p.7). This figure was higher than CAGR of Japan, Hong Kong and Singapore (VietinBankSc p.10).

Figure 1: Vietnam Soft drinks market value: VND trillion, 2011-2013

VIETNAM SOFT DRINKS MARKET VALUE

140 25%

120
20%
100

15%
80

60
10%

40
5%
20

0 0%
2011 2012 2013e

VND TRILLION % GROWTH

(Business Monitor International 2014)

Table 1: Vietnam Soft drinks market value: VND trillion, 2011-2013

VIETNAM SOFT DRINKS MARKET VALUE

YEAR VND TRILLION % GROWTH

2011 58.936 21.69

2012 68.558 16.33

2013e 75.572 10.23

(Business Monitor International 2014)

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MARKET VOLUME

By BMI (2014), Vietnam soft drinks market volume increased from 1820 million litres in 2011 to nearly 2044.14
million litres in 2013. On the opposite trend, the growth rate declined 1.89% from 2011 to 2013.

The Vietnam Non – alcoholic beverages ‘s consumption per capital was 23 litres per year, meanwhile the
global’s statistic was 40 litres (VietinBankSc p.9).

Figure 2: Vietnam Soft Drinks market volume: litres mn, 2011 - 2013

VIETNAM SOFT DRINKS MARKET VOLUME

3500 10%

9%
3000
8%
2500 7%

6%
2000
5%
1500
4%

1000 3%

2%
500
1%

0 0%
2011 2012 2013e

Litres mn % Growth

(Business Monitor International 2014)

Table 2: Vietnam Soft drinks volume: litres mn, 2011 - 2013

VIETNAM SOFT DRINKS MARKET VOLUME

YEAR LITRES MN % GROWTH

2011 1820.11 7.41

2012 1937.14 6.43

2013E 2044.14 5.52

(Business Monitor International 2014)

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MACRO ENVIRONMENTAL ANALYSIS – PESTLE
According to Business to you, the PESTLE analysis with the letters stand for Political, Economic, Social,
Technology, Legal & Environment is the useful tool to investigate the company’s external macro environment
(2016).

SOCIAL
a. Demographic
By the World Population Statistic, in 2013, Socialist Republic of Vietnam’s demographic was
approximately 90.388 million people.

60.7 million Vietnamese people or 68% of Vietnamese demographic was estimated to be younger than
40 prove that Vietnam has a young population and a profuse workforce - 76% or 68.2 million people
aged 15 to 60 years old. Because of this, Vietnam has a "golden population structure" with the ratio of
three to one which means that for every two people who go to work, there is one dependent person
(VPBank Securities 2014 p.5).

It is undoubtable that young people tend to join in outdoor activities is a reason why they have a high
demand on bottle water and energy drinks. Meanwhile, elder people keen on making beverages
especially tea and coffee by themselves.
Figure 3: Vietnam Population Pyramid 2013

(nguyentandung.org 2014)

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 Furthermore, in term of income distribution, there are 6 levels of Vietnamese society (VPBank
Securities 2014 pp. 7-8).

Table 3: Levels of Vietnamese society

A B C D E F
≥ 15 million 7.5 – 14.999.999 4.5 – 7.499.999 3 – 4.499.999 1.5 – 2.999.999 0 – 1.499.999
million million million million million
(VPBank Securities 2014)

From 2010 to 2012, the amount of C class raised while the D, E and F classes followed the downward
trend.
Consequently, the growth of young demographic group and the increase of the middle class brought a
lot of dynamic opportunities in the soft drink market.

Figure 4: Social Frame Work 2014

SOCIAL LEVELS FRAMEWORK

50%
%

45%

38% 39%
40%
34%
35% 32%
30% 27%
25%
25%
21.00% 20%
20%
14% 14%
15%
9% 8%
10%
6%
4% 3% 2% 2%
5% 2%
0%
A B C D E F

2010 2011 2012

(VPBank Securities 2014)

10
b. Culture
Health conscious ranked third right after the unstable economy and occupation in the priority concern
of Vietnamese people. 47% of Vietnamese consumers willing to buy products with natural materials
instead of carbonated water such as non-gas products such as fruit juices, herbal teas (VPBank
Securities 2014 p.12).

Figure 5: The priority concern of Vietnamese People

THE PRIORITY CONCERN OF VIETNAMESE PEOPLE

Economy 19% 14%

Stable occupation 19% 7%

Health 11% 12%

The increase of service price 11% 12%

The increase of food 8% 11%

Balance between work and life 9% 8%

The increase of petrol price 5% 9%

Welfare for mother/father 2% 6%

Debts 3% 3%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Top priority concern Second priority concern

(VPBank Securities 2014 p.12)

Beside, according to Thanh Nien, the amount of Vietnamese people eating out is becoming more and
more widespread (2018). This leads to the development of soft drink industry.

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ECONOMIC
By VNExpress (2018), Gross Domestic Product (GDP) of Vietnam was recognized to develop and reach
maturity at a constant speed. GDP increased from 5.25% in 2012 – the lowest point in period of 7 years
(from 2011 to 2018) to peak at 7.08% in 2018. At the same time, the inflation was restrained: Inflation’
figure decreased from 18.6% in 2011 to 4.7% in 2016 and kept declining at a lower point.

Figure 6: GDP growth and inflation 2011 - 2019

GDP GROWTH AND INFLATION

20%

15%

10%

5%

0%
2011 2012 2013 2014 2015 2016 2017 2018 2019f
GDP Growth 6.24 5.25 5.42 5.98 6.68 6.21 6.68 7.08 6.8
Inflation 18.6 6.8 6.04 6 0.6 4.7 3.5 3.54 3

GDP Growth Inflation

(VNExpress 2018)
In addition, Vietnamese GDP growth rate ranked at high level among Asia- pacific countries (VPBank
Securities 2014 p.4)

Figure 10: GDP growth rate ranking in Asia – pacific 2014

GDP GROWTH RATE

8% 7%
7%
7% 6%
6% 6%
6% 5%
5%
5%
5%
4%
4%
3%
3%
2% 1% 2%
1%
0%
Philipines Indonesia Vietnam Malaysia Singapore Hong Kong

2012 2013

(VPBank Securities 2014 p.4)

For this reason, the money supply of Vietnam is quite stable that improve the consumption of soft
drink industry.

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MARKET SEGMENTATION & TARGETING
Based on category, RTD tea drinks is the largest segment of the soft drinks market in Vietnam, accounting for
58% equivalent with 21 trillion VND (994 million USD) of the market’s total value (VPBank Securities 2014
p.47).
Figure 11: Soft drink market category segmentation 2013

Vietnam soft drink market category segmentation: %share, by

value, 2013
3% 1%

6%
RTD Tea
16%
Carbonates

58% Bottled Drinks

16%
Juice
Energy Drinks
Others

(VPBank Securities 2014 pp. 46 - 47)

Table 4: Vietnam soft drink market category segmentation: VND trillion, 2013
Category 2013 %
RTD Tea 21 58%
Carbonates 6 16%
Bottled Drinks 5.7 16%
Juice 2.1 6
Energy Drinks 1 3
Other 0.4 1

TOTAL 36.2
(VPBank Securities 2014 pp. 46 - 47)

Carbonates consumption declined noticeably. Based on Co.op Mart in Ho Chi Minh city survey statistic in
2018, for every ten soft drink consumers, there are 6 consumers who buy non- carbonated drinks.

Ready – to – drink Tea drinks saw an explosive soar in 1-year period between 20019 and 2010. The
consumption of RTD Tea drinks was one billion litres in 2013, increased 13.3% compare with the figure of
2012. The compounded annual growth rate (CAGR) speed reached 15.9% and 14.95 in weight and in value
respectively (in the space of 3 year from 2010 to 2013).

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MARKET SHARE
In 2013, PepsiCo was the leading supplier in the Vietnam Non – alcoholic beverages market, accounting for
25.5% of the market. At the second place, with the popularity of RTD Tea Drinks, Tan Hiep Phat (THP)
generated a 22.7% share of market value.

Figure 12: Vietnam soft drinks market share: % share, by value, 2013

VIETNAM SOFT DRINK MARKET SHARE

24.7 25.5

3.4
10.5
22.7
13.3

PepsiCo THP URC Vietnam CocaCola Vinamilk Other

(VPBank Securities 2014 pp 47 -48)

Table 5 : Vietnam soft drinks market share: % share, by value, 2013

Company %
PepsiCo 25.5 %
Tan Hiep Phat ( THP ) 22.7%
URC Vietnam 13.3 %
CocaCola 10.5 %
Vinamilk 3.4 %
Other 24.7%

TOTAL 100%
(VPBank Securities 2014 pp 47 -48)

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MARKET DISTRIBUTION
There are 2 main type of channels of distribution: restaurant and commercial. Restaurant channel is the way
consumers use directly in restaurant, coffee shop, cinema etc. While commercial channel consume goods by
market, supermarket etc.

Due to the drinking conception in gathering occasions. Mostly soft drinks distributed by restaurant channel.

Figure 13: Soft drinks market distribution: % share, by value, 2014

SOFT DRINK MARKET DISTRIBUTION:

% SHARE, BY VALUE, 2014

40%

60% Restaurant channel

Commercial channel

(VPBank Securities 2014 p.42)

Commercial channel has 2 type: Modern and traditional channel. One interesting fact that, 65% of retail
turnover comes from traditional channel (VPBank Securities 2014 p.42).

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MARKET OUTLOOK
MARKET VALUE FORECAST
The Vietnam Non – alcoholic beverages market has predicted by BMI to arrive at a value of 83.484 trillion in
2014.
The growth rate has forecast to maintain at nearly 10%.

Figure 14: Vietnam Soft drinks market value forecast: VND trillion, 2014-2018

VIETNAM SOFT DRINKS MARKET VALUE FORECAST

140 25%

120
20%
100

15%
80

60
10%

40
5%
20

0 0%
2014f 2015f 2016f 2017f 2018f

VND TRILLION % GROWTH

(Business Monitor International 2014)

Table 6: Vietnam Soft drinks market value forecast: VND trillion, 2014-2018
VIETNAM SOFT DRINKS MARKET VALUE FORECAST

YEAR VND TRILLION % GROWTH

2014F 83.484 10.47
2015F 91.207 9.25
2016F 99.566 9.16
2017F 109.132 9.61
2018F 119.924 9.89
(Business Monitor International 2014)

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MARKET VOLUME FORECAST

Vietnam soft drinks market has forecasted by BMI to grow by 7.76% to hit the volume 2969.08 million litres in
2018. Besides, the growth rate has predicted to keep increase at a stable speed.

Figure 15: Vietnam Soft Drinks market volume forecast: litres mn, 2014- 2018

VIETNAM SOFT DRINKS MARKET VOLUME

3500 10%
9%
3000
8%
2500 7%
6%
2000
5%
1500
4%

1000 3%
2%
500
1%
0 0%
2014f 2015f 2016f 2017f 2018f

Litres mn % Growth

(Business Monitor International 2014)

Table 7: Vietnam Soft drinks volume forecast: litres mn, 2014- 2018
VIETNAM SOFT DRINKS MARKET VOLUME

YEAR LITRES MN % GROWTH

2014F 2208.74 8.05
2015F 2382.4 7.86
2016F 2569.98 7.87
2017F 2755.33 7.21
2018F 2969.08 7.76
(Business Monitor International 2014)

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RECOMMENDATION:
Because of health conscious of Vietnamese consumers, they are willing to buy even at a higher price drinks
with the healthy nutritional ingredients.

Figure 16: Factors effecting on nutritional goods decision

FACTORS EFFECTING ON NUTRITIONAL GOODS DECISION

8%
8%
36%
Nutritional Ingredients
23% Lower the risk of diseases
Reasonable Price
Medical Certification
25% Other

(VPBank Securities 2014 p.12)

There are some ingredients in tea which defend aging and intensify heart function. In stark contrast,
carbonates is the reason of digestive disorder (VietinBankSc p.6).
Figure 17: Sales of RTD tea drinks, trillion VND 2010 - 2015

SALES OF RTD TEA DRINKS

40 50%

35 45%
40%
30
35%
25 30%
20 25%

15 20%
15%
10
10%
5 5%
0 0%
2010 2011 2012 2013 2014f 2015f

Sales( trillion VND ) Growth rate ( % )

(VPBank Securities 2014 p.47)

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Table 8: Sales of RTD tea drinks, trillion VND 2010 – 2015

SALES OF RTD TEA DRINKS, TRILLION VND 2010 - 2015

YEAR VND TRILLION % GROWTH

2010 14 40
2011 16 16
2012 19 14
2013 21 12
2014f 23 11
2015f 26 10
(VPBank Securities 2014 p.47)

In RTD tea drink market there are a few competitors mostly THP, URC and Suntory PepsiCo. The RTD tea drinks
growth rate was extraordinary. Besides, because the demand was very high so this competition was very
fierce. However, there was a few non-carbonated drinks which have healthy ingredients in Vietnam soft drink
market. In other way, the replacement seem to be very few.

At the same time, carbonates saw a fierce battle between big suppliers such as PepsiCo, CocaCola. These two
brands have the long history and have build a reputation and brand. In fact, by Cafef (2015) Coca Cola gain the
upper hand in the north Vietnam while in the south, carbonates market was mostly dominated by PepsiCo.
Meanwhile,TCP corporation is going to invest 120 million USD in Vietnam soft drink market, especially the
carbonates.

Sales of RTD tea drinks grew steadily from 2010 to 2013 and forecasted to keep move at that speed from 2014
and so on. Although, the growth rate of this goods fell remarkably fromm 40% in 2010 to 12% in 2013, it has
forecasted to remain around 10% (VPBank Securities 2014 p.47).

In short, we should keep investing on soft drink market especially RTD tea drinks not only because tea
is the largest segment of the soft drinks market in Vietnam and its growth rate of sales is stable, but also the
carbonates drinks extremely difficult to compete and the market seem to nearly saturated. We need to step
up sales at commercial channel and diversify drinks in restaurant channel.
We should focus on young people aged 15 – under 40 and elderly by advertising.

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CONCLUSION
In conclusion, the soft drink market in Vietnam keeps growing at a steady speed.

RTD Tea drinks holds the most market segmentation in Vietnam and will remain the growth rate at a stable speed
because there are more and more investors in this type of drinks.

Meanwhile, although carbonates make up a quite big segment but its growth rate seem to be slowly.

20
REFERENCE LIST
Anh Minh, 2018, ‘An economic year with many record’, VNExpress, 30 Decembe, viewed 19 April 2019, <
https://vnexpress.net/longform/mot-nam-kinh-te-nhieu-ky-luc-3861228.html >

Business Monitor International 2014, Vietnam food & drink report, viewed 18 April 2019, retrieved from Soft
Drinks Value/Volume Sales database.
Business to you 2016, Scanning the Environment: PESTEL Analysis. Business to you, viewed 18 April 2019, <
https://www.business-to-you.com/scanning-the-environment-pestel-analysis/ >
Duy Khanh, 2016, ‘In 2015 Vietnam produced 4.8 billion liters of soft drinks' , Brands Vietnam, 07 January,
viewed 18 April 2019, < https://www.brandsvietnam.com/8539-Nam-2015-Viet-Nam-san-xuat-48-ty-lit-nuoc-giai-khat >

Hang T.Nguyen 2014, ‘The non -alcoholic drinks market in Vietnam’, company report, viewed 18 April 2019,
retrieved from VietinBankSc Report Database.

H.Mai, 2018, ‘More and more families like to go to restaurants’ , Thanh Nien, 31 Januar, viewed 19 April 201, <
https://thanhnien.vn/tai-chinh-kinh-doanh/ngay-cang-nhieu-gia-dinh-thich-di-nha-hang-929489.html >.

Hoai Vien, 2018, ‘Soft drinks market: A lot of gaps’, Vietpress, 24 May, viewed 19 April 2019, <
http://www.vietpress.vn/thi-truong-nuoc-giai-khat-con-nhieu-cho-trong-d70986.html >
Nguyentandung.org 2014, ‘Building a comprehensive population statistics database’, 21 August, viewed 18
April 2019, < https://nguyentandung.org/xay-dung-co-so-du-lieu-thong-ke-tong-hop-ve-dan-so.html >

VPBank Securities 2014, Food and drinks market in Vietnam, company report, viewed 18 April 2019, retrieved
from VPBank company report

Van Dam, 2015, ‘Coca Cola and Pepsi vied for the billion-dollar beverage market in Vietnam, Laos, Campuchia
and Myanmar’, Cafef, 22 October, viewed 20 April 2019, < http://cafef.vn/doanh-nghiep/coca-cola-va-pepsi-
tranh-nhau-thi-truong-do-uong-ty-do-o-viet-nam-lao-capuchia-va-myanmar-20151022134800578.chn >
Trang N., 2018, ‘The boss of Red Bull invests 120 million USD into Vietnam energy drinks market’, Cafef, 26
November, viewed 20 April 2019, < http://cafef.vn/ong-chu-red-bull-rot-120-trieu-usd-vao-thi-truong-do-
uong-tang-luc-viet-nam-20181126181337433.chn >

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APPENDIX
In fact, advertising attract Vietnamese people: 68% Vietnamese people effected by advertising, over than the
global average rate 55% (VPBank Securities 2014 p.14)

Advertising effects on inclination

Global 55%
Asia - Pacific 67%
Korea 79%
Phillipin 78%
Indonesia 74%
India 74%
China 72%
Thailand 68%
Vietnam 68%
Malaysia 62%
Singapore 49%
Hong Kong 40%
Taiwan 40%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Advertising effects on inclination

Restaurant channel which include 560,000 coffee shops, restaurants and 12,500 hotels.
Commercial channel has 2 type: modern channel include 424 modern supermarket, 365 mini supermarket and
convenience shop and traditional channel with 778,959 market and small private shop. (VPBank Securities
2014 p.42).

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