Soft Drinks in Vietnam

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Overview

Discover the latest market trends and uncover sources of future market growth for the Soft Drinks industry in Vietnam with research from Euromonitor's team of in-country analysts.

Find hidden opportunities in the most current research data available, understand competitive threats with our detailed market analysis, and plan your corporate strategy with our expert qualitative analysis and growth projections.

If you're in the Soft Drinks industry in Vietnam, our research will save you time and money while empowering you to make informed, profitable decisions.

When you purchase this report, you also get the data and the content from these category reports in Vietnam for free:

• Asian speciality drinks
• Bottled water
• Carbonates
• Concentrates
• Fruit and vegetable juice
• Sports and energy drinks
• RTD coffee
• RTD tea

The Soft Drinks in Vietnam market research report includes:

• Analysis of key supply-side and demand trends
• Detailed segmentation of international and local products
• Historic volumes and values, company and brand market shares
• Five year forecasts of market trends and market growth  
• Robust and transparent market research methodology, conducted in-country

Our market research reports answer questions such as:

• What is the market size of Soft Drinks in Vietnam?
• What are the major brands in Vietnam?
• What potential exists for multinational vs. local soft drinks companies looking to increase market share?
• How have changing social attitudes affected soft drink sales?
• How have sustainability issues; such as environmentally-friendly packaging, legislation on recyclability, or the amount of plastic in bottles, affected the soft drink industry?

Why buy this report?

• Gain competitive intelligence about market leaders
• Track key industry trends, opportunities and threats
• Inform your marketing, brand, strategy and market development, sales and supply functions

This industry report originates from Passport, our Soft Drinks market research database.

Sample Analysis

Healthy drinks gain acceptance

Consumer concerns about calorie intake continued to rise due to the higher number of obesity cases and dental problems reported by the Ministry of Health in the media in the review period. As a result, local consumers paid more attention to healthier types such as RTD tea and fruit/vegetable juice. In 2010, these two categories enjoyed strong growth in total volume and value sales. RTD tea recorded the highest total volume growth in soft drinks in 2010 thanks to its healthy image and refreshing flavour. On the other hand, carbonates continued to register a decline in off-trade volume sales because consumers started to turn away from this product type in search of healthier options.

Marketing and PR become more important

With the higher level of competition in soft drinks in Vietnam, domestic and local manufacturers found it harder to make their brands stand out in the crowd in 2010. In addition, consumers are gradually becoming immune to advertising as they watch hundreds of advertisements every day. Consequently, manufacturers have to continuously find new ways to promote their products creatively and effectively to attract the attention of consumers.

Tan Hiep Phat Group consolidates its leading position

The rapid development of RTD tea in Vietnam helped Tan Hiep Phat Group to maintain its leading position in retail volume and value sales terms in 2010. The company was followed by URC Vietnam Co Ltd. Tan Hiep Phat has been very successful with its advertising campaign in support of Dr Thanh. Through a strong understanding of the market and consumer behaviour, the company’s creative advertising quickly led to success for Dr Thanh. PepsiCo Vietnam (PIVN) and Coca-Cola Beverages Vietnam Co Ltd are ranked third and fourth respectively in 2010, although both multinationals lost shares due to declining sales of carbonates.

Independent small grocers remain the key main distribution channel

During the review period, soft drinks were mainly distributed through independent small grocers, thanks to their convenient locations and widespread availability across the nation. Despite being a very traditional channel and constantly facing tough competition from the modern grocery channels such as hyper/supermarkets and convenience stores, independent small grocers were still favoured by many consumers. Usually located within neighbourhoods, these shops’ owners usually had good relationships with the buyers in the surrounding areas, which made them a pleasant place to shop at.

Soft drinks is expected to register healthy growth in the forecast period

Over the forecast period, the demand for soft drinks in Vietnam is predicted to rise, and existing production levels might not satisfy the increasing demand. Vietnam is one of the most attractive markets for international and domestic players because per capita consumption is much lower than in many other Asia Pacific countries. In spite of the negative growth trend in off-trade volume terms over the review period, carbonates might recover thanks to the expansion of consumer foodservice. Moreover, carbonates manufacturers might switch to producing low calorie carbonates to respond to the rising level of consumer health awareness in Vietnam.

KEY TRENDS AND DEVELOPMENTS

Perceived healthy drinks benefit from the health and wellness trend

In 2010, beverages that were perceived to be healthy, such as RTD tea, bottled water and fruit/vegetable juice, continued to grow strongly, or even faster than in 2009, thanks to increasing health consciousness among consumers. This can be attributed to improving living conditions, with many urban consumers becoming more sophisticated in terms of their choice of food and drink. With many recent cases of food poisoning and bad manufacturing practices, consumers are reading packaging labels more carefully, and they are shifting to trusted brands and products that are perceived to contain higher levels of nutrition.

Current Impact

Rising consumer awareness of health and wellness resulted in strong growth for perceived healthy drinks. RTD tea, fruit/vegetable juice and bottled water recorded the fastest total volume sales growth in 2010, while the only product type to register negative growth was carbonates. This shows that consumers are making conscious choices instead of simply being affected by manufacturers’ marketing efforts, as advertisements for carbonates were much more prominent than for fruit/vegetable juice or bottled water.

Manufacturers and importers tried to capture this trend. Many importers introduced more foreign brands and a wider variety of products to give consumers more choice, for example Mr Drink and Welch’s. In particular, the Big C hypermarket chain introduced its premium private label, Casino Bio, which can be considered the first mainstream organic fruit/vegetable juice in Vietnam.

Outlook

The trend for healthier beverages is expected to be prominent in the forecast period, thanks to various factors. Improving living standards and better education will result in higher demand from consumers for good quality, high nutrition products. The rising number of obesity cases, which is frequently reported in the media, will create a fear factor, urging consumers to be more careful about their food and drink choices.

One threat to the development of this trend is the increasingly busy lifestyles of urban consumers. Hectic and stressful lifestyles could encourage many consumers to turn to comfort or indulgence food and drink products, which tend to be unhealthier choices.

Future Impact

With the rising demand for healthy and nutritious, yet tasty, products, industry players will face more challenges and tougher competition to provide consumers with the products they want. Research and development will also need to be put to good use, as consumers are expected to make more informed purchasing decisions. Many consumers are developing the habit of reading labels before choosing products. Thus, manufacturers are expected to launch more wholesome products to capture the attention of consumers.

While total volume sales of carbonates are expected to decline, RTD tea, bottled water and fruit/vegetable juice are projected to register strong growth over the forecast period. Therefore, leading international players, such as PepsiCo Vietnam and Coca-Cola Beverages, might shift their local focus to perceived healthier product types. Consumers will benefit most from this trend, as they can enjoy good new products from both big domestic players, including Vietnam Dairy Products JSC (Vinamilk) and Tan Hiep Phat, and international giants.

Distribution and marketing play significant roles

During the review period, the more intense competitive environment in soft drinks in Vietnam put strong pressure on both domestic and international manufacturers. Improving living standards and rising household income increasing the demand from local consumers, and the need for more sophisticated products. Therefore, it is difficult for manufacturers to lure consumers to their brands or to differentiate their offerings from those of competitors. Hence, marketing and distribution have become more and more important in terms of the success of manufacturers in the review period. Vietnamese consumers pay little attention to advertisements given the soaring number of brands available. Manufacturers are therefore required to create impressive and creative advertisements to lead consumers to their brands.

Besides marketing, distribution is crucial for any soft drinks manufacturer looking to establish a presence in Vietnam. As most producers continue to upgrade their production technology, the taste offered by soft drinks brands is not significantly different. Therefore, consumers normally choose a brand that is available where they shop or in coffee shops. As a result, a nationwide distribution network is a key factor in the success of soft drinks manufacturers in Vietnam.

Current Impact

In 2010, many domestic and international manufacturers executed various marketing and advertising campaigns. The biggest campaigns were provided by PepsiCo Vietnam, Coca-Cola Beverages and Tan Hiep Phat. During 2010, PepsiCo Vietnam’s and Coca-Cola Beverages’s advertisements featured famous football players to coincide with the World Cup in South Africa. These campaigns tried to stimulate sales of their carbonates by tapping into the passion for football among Vietnamese consumers. These two major international players aggressively advertised brands on television and the internet, and in newspapers and magazines. Thus, despite the decline in off-trade volume sales of carbonates, PepsiCo Vietnam and Coca-Cola Beverages increased their retail volume sales in soft drinks and affirmed their leading positions in carbonates.

Another example of successful marketing is Tan Hiep Phat’s Dr Thanh. Although Dr Thanh was introduced in Vietnam at the end of 2009, the company launched a very successful marketing campaign, which ensured that Dr Thanh reached every province in Vietnam within two months. In 2010, the brand registered dynamic off-trade volume growth to consolidate its position in soft drinks.

PepsiCo Vietnam, Coca-Cola Beverages and Tan Hiep Phat possess nationwide distribution networks. Consumers can easily find their products in various distribution channels, from supermarkets/hypermarkets and independent small grocers to coffee shops and wet markets. These strong distribution systems contribute to their success in soft drinks in Vietnam.

Outlook

Consumers are quick to switch brands because soft drinks are classified as low-involvement product types. Hence, manufacturers are expected to increase their advertising and marketing efforts to encourage existing consumers to choose their products while attracting new consumers in the forecast period. Furthermore, some types, such as RTD tea and fruit/vegetable juice, are still at the development stage, and a consolidation trend might occur during the forecast period. Unique and attention-catching advertising campaigns and better distribution reach are essential for manufacturers seeking to stand out and gain share to secure their competitive position.

Future Impact

In the forecast period, consumers will be targeted by more creative advertising campaigns from manufacturers. For example, in 2010, Tan Hiep Phat launched a new advertising campaign for Zero Degree Green Tea (RTD tea). Instead of focusing on the freshness and coolness of the drink as in previous advertisements, the company associated relaxed and comfortable sensations with consuming Zero Degree Green Tea. Tan Hiep Phat is predicted to continue this new advertising theme in the forecast period, in order to renew its first successful brand, which has been losing shares to brands such as C2 Cool & Clean (URC Vietnam) and Lipton Pure Green Tea.

More importantly, both local and international manufacturers will cooperate with supermarkets and hypermarkets to launch various discounting and promotional campaigns to boost sales. Local manufacturers might focus on distribution in rural and suburban areas to avoid direct competition from giant multinationals.

Local manufacturers make gains

In the past, when carbonates led soft drinks in Vietnam, international manufacturers such as PepsiCo Vietnam and Coca-Cola Beverages dominated thanks to their financial strength and global experience. Since the introduction of Zero Degree Green Tea in Vietnam, domestic manufacturers, especially Tan Hiep Phat, have gained shares from international brands. Over the review period, as consumers became more aware of their calorie intake, they paid increasing attention to healthier beverages such as Asian speciality drinks, RTD tea and fruit/vegetable juice, where domestic manufacturers have a stronger presence.

Current Impact

Local manufacturers such as Vietnam Dairy Products (Vinamilk) have been very active in marketing their brands. For example, Vinamilk launched various for its fruit/vegetable juice products in popular supermarkets and hypermarkets to encourage local consumers, who are attracted by special offers and discounts. Furthermore, at the end of the review period, Vinamilk launched new packaging, which is professional and appealing in appearance, in order to persuade local consumers that Vietnamese offerings are of similar high quality to foreign brands. Meanwhile, Tan Hiep Phat was one of the most successful domestic manufacturers in 2010, partly due to its advertising support for Dr Thanh, which reflected the company’s good understanding of the market and local consumer behaviour.

Outlook

The competitive landscape in soft drinks in Vietnam remained quite fragmented in 2010. Therefore, local and international players are looking to compete more aggressively in the forecast period. The rising health awareness in the country is encouraging domestic players to continue to develop their areas of strength in RTD tea, fruit/vegetable juice and Asian speciality drinks. The consolidation trend is predicted to occur in the short-to-medium term, as most manufacturers try to maintain or improve their competitive positions.

Future Impact

The competitive environment is expected to intensify in the forecast period. With the support of the government, local players will be more active in the industry. For example, local manufacturers will increasingly participate in trade fairs in an attempt to generate brand awareness among Vietnamese consumers. Furthermore, the limited budges of domestic companies might encourage a focus on rural areas, which account for 80% of the national territory. On the other hand, international manufacturers could utilise new product developments to increase their penetration of Vietnamese households. However, the leading local players, such as Tan Hiep Phat and Vinamilk, are expected to hold the key to product innovation in soft drinks in Vietnam.

Rapid penetration of consumer foodservice

With the fast pace of industrialisation and the development of economy, the lifestyles of Vietnamese consumers are increasingly hectic. People tend to spend more time at work, which reduces time for cooking and household chores. As a result, more and more consumers are dining out to save time. In 2010, the number of consumer foodservice outlets, especially fast food, increased rapidly in response to the growing demand from consumers.

Current Impact

The development of consumer foodservice in Vietnam offers good growth opportunities for on-trade sales of soft drinks as consumers tend to order such beverages with meals. Carbonates, bottled water, RTD tea and Asian speciality drinks are the most popular soft drinks in the on-trade channel. Manufacturers responded to the increased demand in the on-trade channel by offering consumers a wide range of products in different bottle formats and sizes. For example, Coca-Cola and Pepsi are available in 300ml glass bottles, 350ml, 500ml and 1.5 litre PET bottles to accommodate different usage and consumption occasions.

In Vietnam, teenagers, in particular, often socialise in fast food outlets. Carbonates is the main type of soft drink consumed in fast food outlets. The rising number of fast food outlets by brands such as Lotteria, KFC and Jollibee boosted on-trade volume sales of carbonates, despite declining sales in the off-trade channel.

Outlook

Teens and young adults demand for a place where they can socialise with friends, colleagues and family. Therefore, it is expected that the number of consumer foodservice outlets will continue to grow over the forecast period in line with the dining out. The number of consumer foodservice outlets is predicted to reach around 550,000 in 2010. Popular consumer foodservice types in Vietnam include fast food, full-service restaurants and specialist coffee shops.

Future Impact

Fast food, full-service restaurants and cafés/bars are expected to create good growth opportunities for soft drinks in Vietnam. For specialist coffee shops, soft drinks represent a good choice for consumers who are not into hot drinks. The most common soft drinks sold in coffee shops are carbonates, bottled water and Asian speciality drinks, which have a longer presence in these outlets. Most soft drinks in consumer foodservice outlets are served in glass bottles. While the price of soft drinks in fast food outlets, coffee shops and full-service restaurants are much more expensive than in the off-trade channel, the prices of soft drinks from street vendors are not significantly lower.

Private label offers growth potential

2009 and 2010 witnessed the increasing availability of private label soft drinks. More importantly, these products were available in various categories. Big C’s Casino, and Co.opMart are examples of private labels targeted at mass consumers. Big C also introduced Casino Bio in 2010, a range of fruit/vegetable juice made from organic produce, aimed at high-end consumers.

Current Impact

In soft drinks, the participation of private label was still at an early stage of development. The number of private label products remains limited. However, the entrance of big names like Big C and Co.opMart is a good start, and the consumer awareness of private label is growing.

Although there are few private labels present in soft drinks in Vietnam, there is a good variety of products for consumers to choose from. Private labels are positioned from mass (eg Casino fruit juice, or Co.opMart bottled water) to premium (Casino Bio organic fruit/vegetable juice). They also vary in terms of pricing and positioning across categories, including bottled water and fruit/vegetable juice. However, in 2010, private label sales remained negligible.

Outlook

According to Vietnam Retail Association, which issued a public announcement in early 2011, the modern retailing landscape, including modern grocery retailers like hypermarkets, supermarkets and convenience stores, is expected to grow strongly and gradually take over from traditional retailers in the medium-to-long term. This provides private label players with growth opportunities as they will have more exposure to mass market consumers and better coverage throughout the country.

Growing consumer demand might also be a catalyst for the expansion of private label in the future. Smart shopping is expected to rise as consumers continue to look for higher value for money products. Thus, private label has a competitive advantage thanks to a fuss-free image, and the offer of high-quality products at relatively low prices.

Future Impact

With the expected rise of modern retailing, private label soft drinks may become the focus of many retailers looking to gain competitive advantages. The wide availability of private label products in home care and packaged food in 2010 is expected to lead to private label penetration in other industries, including soft drinks.

However, private label will need time to successfully penetrate soft drinks. With the rapidly increasing number of brands in the market, together with manufacturers’ efforts in launching more creative marketing campaigns, it might be more challenging for private labels to catch consumers’ attention and drive sales.

MARKET DATA

FOUNTAIN SALES IN VIETNAM

Trends

• In Vietnam, the number of fast food outlets increased dramatically over the review period as the young generation, in particular, considers them suitable places to socialise with friends. Since KFC’s first outlet opened in Vietnam in 2000-2001, the number of fast food units has increased year-on-year. Other fast food chains in Asia Pacific, such as Lotteria and Jollibee, entered Vietnam and expanded quickly. In 2009-2010, these chains continued to grow thanks to the increasing population of teenagers and children in urban areas.

• Fast food outlets in Vietnam sell soft drinks either in the canned format or via fountain sales. Despite the constant increase in the rising number of outlets, fountain sales of branded drinks still account for a low share of total volume sales of soft drinks in the country. While soft drinks can be served via fountains in fast food outlets, the majority of consumers choose 330ml cans for carbonates and 500ml bottled water. Consumers consider cans and bottles to be more convenient and portable.

• Pepsi appears to enjoy a better competitive position than Coca-Cola in terms of fountain sales. The Pepsi brand is sold in most of the established fast food chains in the country, including Jollibee, Lotteria and KFC, while Coca-Cola is sold more in newer chains such as Carl’s Jr and Popeyes Chicken & Biscuits. However, with the rapid development of fast food, and consumer foodservice in general, it is uncertain whether Pepsi’s competitive edge will remain intact.

• There has been no thorough study to measure fountain sales in convenience stores in Vietnam. Fountain sales through convenience stores appear to be negligible as convenience store format is quite new to Vietnamese consumers. In 2010, Family Mart, a new chain of convenience stores, appeared to be the only one offering fountain sales of soft drinks.

• Over the forecast period, fountain sales are expected to grow thanks to the ongoing development of consumer foodservice in Vietnam. Nevertheless, this trend might not be visible instantly as KFC appeared to be the only fast food outlet offering branded fountain sales at the end of the review period. Fountain sales may be introduced by more convenience stores as consumers become more familiar with this modern retail channel.

Data

DEFINITIONS

This report analyses the market for Soft Drinks in Vietnam. For the purposes of the study, the market has been defined as follows:

• Carbonates

• Fruit/vegetable juice

• Bottled water

• Sports and energy drinks

• Concentrates

• RTD tea

• RTD coffee

• Asian speciality drinks

Sources used during research include the following:

STRATEGIC DIRECTION

• Interfood Shareholding Co has expanded its production capacity with a new plant, covering more than 10-times the floor space of the previous facility. The company is taking the opportunity to invest in new technology in order to upgrade its facilities with modern equipment and machinery to meet to contemporary food processing standards. This expansion reveals the manufacturer’s aim to become the leading player in soft drinks in Vietnam. It is expected to look to grow company shares by launching more products and by focusing on marketing and advertising.

KEY FACTS

COMPANY BACKGROUND

• The company was founded on 16 November 1991 as Interfood Processing Industry Ltd. On 19 August 2005, it was equitised to become a fully foreign invested company under a new name, Interfood Shareholding Co.

• Interfood Shareholding Co’s mother company is a food and beverage corporation from Malaysia, active in soft drinks for over 30 years with branches in over 30 countries worldwide.

• The manufacturer acquired a 90% stake in AvaFood Industries Co Ltd in June 2007. It also has two subsidiary companies: Interfood Packaging Shareholding Co, and Northern Interfood Shareholding Co, established on 14 February 2008.

PRODUCTION

• Interfood Shareholding Co has its main factory in Bien Hoa City. Moreover, the company has a factory in Bac Ninh Province for the manufacture of fruit/vegetable juice.

• The company has a wide product portfolio spanning cookies, Asian speciality drinks, and crackers. In 2010, Interfood Shareholding was set to introduce PET-bottled green tea in Vietnam.

COMPETITIVE POSITIONING

• Interfood Shareholding was overtaken by Vietnam Dairy Products in fruit/vegetable juice in 2010, falling to second position with an 18% share of off-trade value sales. The company’s retail volume and value shares continued to decline due to fierce competition from rivals. It is weak in terms of marketing and advertising activities, which is a perceived to be the main reason for its share decline.

• It is one of the few companies offering many different types of soft drinks. This has helped Interfood Shareholding to remain among the top 10 industry players.

• The company’s key customers are low- and middle-income consumers. Therefore, its products carry affordable prices and eye-catching packages. Interfood Shareholding’s products are high in vitamins and low in saturated sugar which helps to prevent obesity and heart diseases. For example, its coconut juice product is very popular with local consumers due to its delicious taste, health qualities and reasonable price.

STRATEGIC DIRECTION

• Saigon Beverages JSC (Tribeco) plans to become the leading beverage manufacturer in Vietnam by offering a wide range of nutritious and healthy products. In the forecast period, the company plans to focus on developing its RTD tea and fruit/vegetable juice offerings to respond to the health and wellness trend in the country.

• Given the more intense competitive environment in soft drinks, Saigon Beverages seems to be more active in launching marketing initiatives and PR events to attract the consumers’ attention to its brands and products. More importantly, the company aims to restructure its financial system, such as debt ratio, to ensure its daily production rates and then expand operations.

KEY FACTS

COMPANY BACKGROUND

• The company was established in November 1992 as Saigon Beverages Co Ltd. At that time, the government held a 51% share of capital, managed by the state-owned company Foodexco. With the agreement of the government, it became the private company at the end of 2009.

• In February 2001, the business format was changed to a joint stock company under a new name, Saigon Beverages JSC (Tribeco). The additional funds created more opportunities to strengthen the firm’s competitive positioning and to install modern production techniques. Up to July 2009, Kinh Do Corp held a 23.4% share, while Uni-President Vietnam Co Ltd held 43.6% of stock in Saigon Beverages.

• The core business of the company is producing soft drinks, including carbonates, fruit/vegetable juice and soya milk. Furthermore, Saigon Beverages has investments in other business areas, such as property and packaged food through its strategic partners Kinh Do and Uni-President Vietnam.

• In 2009, Uni-President Vietnam and Saigon Beverage announced a strategic cooperation and plans to develop nutritious products in Vietnam. As the major shareholder of Saigon Beverages, Uni-President Vietnam will support improvements to its financial system, marketing, and human resources.

PRODUCTION

• Saigon Beverages’s factories are situated in Binh Duong and Hung Yen province. Binh Duong factory produces mainly for southern regions, whilst the Hung Yen factory is responsible for distributing products in northern Vietnam. As a result, the company is able to respond rapidly to consumers’ orders nationwide.

• Initially, Saigon Beverages produced only carbonates. However, the company gradually lost shares due to the entrance of PepsiCo and Coca-Cola in Vietnam. Consequently, it decided to switch to producing soya milk and other Asian speciality drinks to avoid the competition of multinational giants.

• The manufacturer exports its products directly to the US, India, Cambodia and South Korea, and indirectly to Taiwan and the Netherlands.

COMPETITIVE POSITIONING

• Saigon Beverage is the third-ranked player in carbonates with ay 7% share of retail value sales in 2010. The company focuses on developing non-cola carbonates to avoid direct competition from PepsiCo and Coca-Cola in cola carbonates. It is ranked third in RTD tea, after Tan Hiep Phat and URC Vietnam.

• In 2010, overall retail volume and value shares increased as the company paid more attention to strengthening its brands, especially in RTD tea. Green Tea 100 received a good response from consumers thanks to its taste, flavour and affordable price. In 2010, it introduced a new RTD tea product, Watea (lotus and jasmine flavour).

• The manufacturer usually targets low- and middle-income consumers; therefore the majority of its products carry lower prices compared to those of other leading brands. Despite lower prices, Saigon Beverages attracts consumers by offering good quality products. In addition, it continues to invest in upgrades to machinery and improved distribution. For example, the company cooperates with retailers to promote its products within, for example, supermarkets and hypermarkets, using billboard and in-store posters or discounting.

STRATEGIC DIRECTION

• Saigon Pure Water Pte Enterprise aims to become the leading manufacturer in bottled water in Vietnam. During the review period, it was one of the few local players to invest heavily in technological innovation to ensure the highest product quality and to fulfil the hygienic standards and rules issued by the government.

• It was the first manufacturer to utilise antiseptic production technology with Ozone (O3) in Vietnam. The company’s business philosophy “4 S?ch” (Four Cleanliness), implying the ‘cleanliness’ of its people, factory, products and profit, is aimed at bringing the best bottled products at affordable prices to local consumers.

KEY FACTS

COMPANY BACKGROUND

• Saigon Pure Water Pte Enterprise was established in 1990 as a private company. At this time, bottled water in Vietnam was led by multinational manufacturers, such as La Vie Joint Venture. Moreover, the price of bottled water was high, and only high-income consumers could afford to purchase such products. The company realised the potential for bottled water in Vietnam, thus it invested in production technology with the slogan “T?n cùng c?a s? tinh khi?t” (Purity till the end). It aims to provide good quality bottled water at prices affordable to low- and middle-income consumers in Vietnam.

• The firm’s core business is producing and distributing bottled water across the country. In addition, the company specialises in trading production technologies for food and foodstuffs. However, this is only a support business for its core operation.

• From the outset, Saigon Pure Water has tried to build a nationwide distribution network in Vietnam. Its products are present in most supermarkets/hypermarkets, independent small grocers, and consumer foodservice types. More importantly, the company offers a professional and friendly call centre, which enables consumers to order bottled water with free delivery service and flexible deposits.

• It is proud to be one of the first Vietnamese manufacturers to receive the international ISO 9001:2008 certificate for quality.

PRODUCTION

• Saigon Pure Water’s factory is located in Ho Chi Minh City; it covers over 300 sq m and is equipped with a full automation system in order to provide transparency and purity. All products are locally produced at the factory. The company transports its products to distribution centres situated in different regions to reach all consumers in Vietnam.

• The manufacturer produces private label products for Saigon Trading Union Cooperatives, which are sold through all Co.opMart and Co.opFood outlets.

COMPETITIVE POSITIONING

• Saigon Pure Water is the third-ranked player, and the leading local manufacturer, in bottled water with a 16% share of off-trade value sales in 2010. The company’s retail value share has declined slightly over the review period due to strong competition from the international bottled water players, namely La Vie Joint Venture, PepsiCo Vietnam and Coca-Cola Beverages. However, it continues to enjoy a strong brand image and the trust of many consumers, especially in the south of the country.

• The company’s position as the leading local manufacturer of bottled water is due to a strong distribution system and the offer of good quality products at the most affordable prices. It invests heavily and continuously in technology and product innovation in order to compete with international brands such as La Vie and Aquafina.

• Unlike PepsiCo Vietnam and Coca-Cola Beverages, Saigon Pure Water only produces bottled water. Therefore, it is able to focus on developing a strong bottled water presence and offer.

STRATEGIC DIRECTION

• Tan Hiep Phat Group aims to remain the leading manufacturer in soft drinks in Vietnam. In the review period, the company has made strong efforts to build brand awareness and a diversified product portfolio. In the short term, Tan Hiep Phat is looking to strengthen its competitive positioning and to expand its consumer base to deal with growing competition in Vietnam. In the long term, the leading player plans to search for new markets, exporting brands such as Zero Degree and Dr Thanh to Asian countries.

KEY FACTS

COMPANY BACKGROUND

• Formerly known as Ben Thanh Beer & Beverages Co Ltd, the company was founded on 15 October 1994. Initially, it specialised in manufacturing and trading beer and alcoholic drinks. Since its establishment, the company continued to improve its product quality by upgrading to new manufacturing technology and applying ISO standards. It is one of few local producers willing to invest in R&D and branding activities to increase volume and value sales.

• In 2004, Ben Thanh Beer & Beverages Co Ltd changed its name to Tan Hiep Phat Manufacturing and Trading Co Ltd. In 2010, Tan Hiep Phat remained a private company, extending its product portfolio to include many non-alcoholic drinks alongside beer, its core product type. The RTD tea brand, Zero Degree, and energy drink brand, Number 1, are among its most popular offerings.

• The manufacturer has a nationwide distribution network. Its products are present in all 64 cities and provinces in Vietnam. Consumers can easily purchase its products in supermarkets/hypermarkets, food/drink/tobacco specialists, independent small grocers, and even street vendors.

• In 2010, Tan Hiep Phat’s two RTD tea brands, Dr Thanh and Zero Degree Green Tea, received the Vietnam National Brand award. Also in this year, the company officially adopted the Enterprise Resource Planning system for the whole production process, to improve production efficiency and ROI (Return on Investment).

PRODUCTION

• Tan Hiep Phat’s head office and factory are located in Thuan An district (Binh Duong Province), spanning over 110,000 sq m. The factory exploits a chain of fully automatic production systems to ensure hygiene and product quality.

• It is regarded as one of the manufacturers with the most modern production techniques and machinery in Vietnam. In particular, Tan Hiep Phat invested heavily in launching the Enterprise Resource Planning system from SAP in April 2010. This move reflected the ambition of the company to boost its production rate and to reduce waste in order to enhance efficiency and product quality.

• Vietnam remains the core market for Tan Hiep Phat. Towards the end of the review period, after the huge success of Zero Degree Green Tea and Dr Thanh, the company started to expand its presence in neighbouring countries. However, due to the negative impact of the global economic crisis on the region, the manufacturer decided to slow down its export business to focus on the domestic market. In 2010, as the regional economy started to recover, Tan Hiep Phat returned to its export strategies to regain a presence in neighbouring markets.

COMPETITIVE POSITIONING

• In 2010, Tan Hiep Phat maintained the leading position in soft drinks market thanks mainly to its strength in Asian still RTD tea. It is also the leading player in sports drinks and the third-ranked company in energy drinks in retail value sales terms.

• In 2010, Tan Hiep Phat continued to gain retail volume and shares in Vietnam thanks to the huge success of Dr Thanh herbal RTD tea. Although Dr Thanh was only launched at the end of 2009, it rapidly became very popular. Like Zero Degree, Dr Thanh benefited from a strong strategic direction, a deep understanding of the Vietnamese market and consumer habits and mass media advertising. Moreover, Dr Thanh was introduced at the right time as consumers increasingly looked for “healthy” drinks to replace carbonates during hot days in Vietnam.

• The company offers a wide product portfolio of non-alcoholic drinks in Vietnam, including bottled water, RTD tea, and sports and energy drinks. Zero Degree, Dr Thanh and Number 1 are the manufacturer’s most popular brands. Tan Hiep Phat appears to be most active in RTD tea. It offers many RTD tea flavours, such as: sugared or sugar-free green tea, herbal tea, and winter melon tea. The leading player’s products are aimed at more health conscious consumers, for example, females and the elderly.

• Tan Hiep Phat is among the leaders in terms of product innovation and technological improvements in soft drinks in Vietnam. Zero Degree Green Tea and Dr Thanh are good examples of this activity. The company’s Number 1 brand faced strong competition from other energy drinks such as Sting and Red Bull. Tan Hiep Phat decided to launch Zero Degree Green Tea, which is completely new in the market. It invested heavily in research in order to offer consumers the “perfect” drink on hot days. In addition, the packaging of Zero Degree is quite appealing and creative. Together with mass advertising on television and in the printed press, Zero Degree quickly caught the consumers’ attention. The most recent new product development by Tan Hiep Phat is Dr Thanh Herbal Tea, which was launched in 2009.

STRATEGIC DIRECTION

• Vietnam Dairy Products plans to strengthen its product line in soya milk and fruit/vegetable juice to tap into the rising awareness of health and wellness in Vietnam. In the review period, the company has tried to invest heavily in resources to become the leading manufacturer of healthy food and dairy products.

• Through Vinamilk, a popular brand of baby food and milk products, the firm aims to concentrate on product research and development to enhance its position in soft drinks. In 2010, Vietnam Dairy Products announced plans to enter RTD Tea with RTD artichoke tea, to increase its sales shares in non-alcoholic drinks in Vietnam.

KEY FACTS

COMPANY BACKGROUND

• The manufacturer was founded in 1976, a year after liberation, under Southern Coffee-Dairy Company. It was initially controlled and managed by the government. In 2003, the firm changed its business formation to that of a joint stock company, and changed its name to Vietnam Dairy Products JSC.

• The core business of the company is producing healthy dairy products and food. It has a wide product portfolio, including fruit/vegetable juice, soya drinks, bottled water, coffee, tea, and dairy.

• The level of advertising has been increasing dramatically in line with the higher growing competition in non-alcoholic drinks in Vietnam. In 2010, Vietnam Dairy Products continued to implement many activities for poor and disabled people, such as the “One million cups of milk for Vietnamese poor children” campaign and the “Vinamilk Scholarships – Inspiring Young Talent” fund.

• Vinamilk has been voted the top brand in customer polls for the “Top Ten High-Quality Vietnamese Goods”, organised by Sai Gon Tiep Thi newspaper, every year since 1995.

PRODUCTION

• Vietnam Dairy Products possesses nine factories in Vietnam, with total annual production capacity reaching 504,000 tonnes, including dairy products and drinks. In terms of soft drinks, Vinamilk soya bean drinks are produced at the Truong Tho Milk factory in Ho Chi Minh City and the Hanoi Milk factories in Hanoi. Vinamilk V-Fresh fresh fruit/vegetable juice is also manufactured at Truong Tho Milk factory in Ho Chi Minh City, while coffee is produced mainly at Saigon Coffee Factory in Binh Duong province.

• The company also exports its products to international markets, some of which are very competitive, such as the US, Canada, France and other European countries, China, Australia, the Middle East and Southeast Asia.

COMPETITIVE POSITIONING

• In 2010, Vietnam Dairy Products overtook Interfood Shareholding and Dona New Tower JV to become the leading player in fruit/vegetable juice through the popular Vinamilk V-Fresh brand. The company’s fruit/vegetable juice products are priced a little lower than those of international brands, yet the quality is comparable. As a result, Vinamilk V-Fresh attracts new consumers and it has gained the trust and loyalty of existing consumers.

• As the leading manufacturer in fruit/vegetable juice, Vietnam Dairy Products is responsible for product innovation and packaging improvements. The manufacturer is not hesitant about investing finance and human resources in research and new product developments, in order to strengthen its sustainable competitive advantages and increase company/brand shares in Vietnam.

STRATEGIC DIRECTION

• In 2010, Vinh Hao Mineral Water JSC increased its competitiveness by renewing its brand image and packaging design. The company plans to further penetrate soft drinks by launching new carbonated bottled water products, and by focusing on marketing and PR activities.

KEY FACTS

COMPANY BACKGROUND

• Established in 1930, Vinh Hao was the first domestic mineral water producer. In the early days, it was a state-owned business, managed by the Binh Thuan People’s Committee. In 1995, the company equitised and its name was changed to Vinh Hao Mineral Water JSC.

• Vinh Hao was voted one of Vietnam’s High Quality Products by consumers for nine consecutive years, from 2000-2008.

PRODUCTION

• The company’s factory is located in Binh Thuan province. It also has representative offices in big cities such as Ho Chi Minh City and Hanoi, to facilitate the distribution of its products to every province in Vietnam.

• Vinh Hao specialises in large sized bottled water (5 litres and 25 litres) for use in offices. The company has utilised fully automatic production and bottling technologies and the strict inspection of products before distribution to wholesalers and other distributors.

• The company is proud to be the first manufacturer of mineral water in Vietnam to export its products to markets such as the US, Australia, Canada and Taiwan.

COMPETITIVE POSITIONING

• Vinh Hao Mineral Water is the seventh-ranked player in bottled water, in retail volume and value terms, in Vietnam in 2010. Vinh Hao is one of several local brands that supply carbonated bottled water. Its carbonated bottled water is believed to offer health benefits thanks to a high mineral content.

• The company is looking into adding more minerals to products and widening its product portfolio in order to capture a larger share of bottled water sales.

HEADLINES

• Thanks to Asian still RTD tea, Asian speciality drinks enjoys rapid off-trade volume growth of 36% in 2010

• Rising health and wellness awareness benefits Asian speciality drinks

• The average unit price increases due to inflation in 2010

• RTD tea manufacturers continue to dominate Asian speciality drinks in 2010

• Sales of Asian speciality drinks are expected to grow by a 22% off-trade volume CAGR over the forecast period

TRENDS

• Asian speciality drinks continued to record dynamic growth in 2010 thanks to the rapid development of Asian still RTD tea. Asian still RTD tea, which accounted for a 95% share of off-trade volume sales of Asian speciality drinks in 2010, remains one of the most popular beverages due to its naturally healthy image. Active marketing activities, together with many new product developments and innovations, helped to maintain strong volume and value sales growth for Asian still RTD tea in particular, and Asian speciality drinks as a whole.

• In 2010, off-trade volume sales grew at a much slower rate than in 2009 due to the maturity of Asian still RTD tea. Meanwhile, cereal/pulse-based drinks and “other” Asian speciality drinks remain niches and they did not see a strong wave in consumer demand to compensate for the slowdown of Asian still RTD tea.

• Cereal/pulse-based drinks, mostly soy bean drinks, are not very popular due to heavy competition from soy milk and unpackaged products. Soy milk is considered a very traditional product, and it can be found easily in every neighbourhood in fresh/unpackaged format. Thus, consumers saw little need to purchase soy bean drinks. Moreover, soy milk, with is very cheap, provided strong competition to soy bean drinks, as consumers regard soy milk as a better value for money purchase.

• Asian speciality drinks attracts a very wide consumer base. Products such as Asian still RTD tea and soya bean drinks are consumed by consumers of all ages, from small children to adults and the elderly. Local consumers have long consumed these drinks in unpackaged formats before they were mass produced and packaged.

• In general, Asian speciality drinks are considered a good choice in terms of healthy beverages. Products such as bird’s nest and grass jelly drinks are believed to have high nutritional content and to provide cooling effects on the body, which is especially popular on hot days.

• The average unit price continued to increase in current value terms due to rising inflation, which reached 12% in 2010. Another contributing reason for unit price growth was the high exchange rate between the US dollar and the Vietnam dong. This affected manufacturers and importers as many raw materials and brands are imported.

• The retail channel accounted for a 64% share of volume sales in 2010. The majority of Asian speciality drinks are available in metal beverage can and bottle formats. They are therefore quite convenient to store in the fridge, carry in the hand or in bags.

COMPETITIVE LANDSCAPE

• As Asian still RTD tea accounted for the overwhelming majority of sales of Asian speciality drinks, RTD tea players enjoy strong competitive advantages. Tan Hiep Phat is the leading player with a 38% share of off-trade value sales in 2010, thanks to the huge success of Dr Thanh and Zero Degree Green Tea. URC Vietnam is the second-ranked player through the C2 Cool & Clean RTD tea brand. RTD tea is the core product type of most of the leading companies. Interfood Shareholding, the only company in the top five that offers various types of Asian speciality drinks, held a 4% share of off-trade value sales in 2010.

• Pepsi-Lipton International registered the biggest growth in off-trade volume and value sales in 2010 as Lipton Pure Green Tea gained higher acceptance from local consumers. A wide distribution reach and the popularity of the Lipton brand in hot tea contributed to the success of Lipton Pure Green Tea in spite of low advertising investment. Most of the leading players experienced double-digit off-trade volume and value sales growth in 2010 thanks to the rising demand for healthy drinks in Vietnam.

• Overall, domestic and multinational players accounted for similar off-trade sales shares in Asian speciality drinks. Leading domestic players, including Tan Hiep Phat, Saigon Beverages and Tan Quang Minh Manufacture & Trading Co Ltd, faced constant competition from multinational players, including URC Vietnam, Interfood Shareholding and Pepsi-Lipton International. While local companies have an advantage in terms of understanding the local markets and consumer habits and needs, big multinational players are able to exploit their global exposure, strong financial capability and brand building experience. Thus, domestic and multinational players have the potential to record strong sales growth in Asian speciality drinks in the forecast period.

• Despite new product developments and marketing activities in Asian still RTD tea, other types of Asian speciality drinks witnessed little development or innovation. This was mainly because of their small sales size compared to Asian still RTD tea. When the spike in the demand for Asian still RTD tea is over, manufacturers might focus more on other types to push growth.

PROSPECTS

• Sales of Asian speciality drinks are expected to grow by a 22% off-trade volume CAGR over the forecast period. This growth is much slower than the review period CAGR due to the ongoing maturity in Asian still RTD tea. Moreover, the development of other types of Asian speciality drinks is unlikely to be sufficiently robust to compensate for the slowdown in growth of Asian still RTD tea.

• Nonetheless, Asian still RTD tea is expected to continue to record the fastest volume and value sales growth over the forecast period. This is because RTD tea remains a high profile beverage, which benefits from very dynamic marketing and PR activities, compared to other types of Asian speciality drinks. Nonetheless, there is good growth potential for Asian juice drinks, cereal/pulse-based drinks and “other” Asian speciality drinks, if manufacturers are able to capture the consumers’ attention in the same way as Tan Hiep Phat did with RTD tea in 2006-2007.

• It is unlikely that Asian speciality drinks will encounter threats from other types of soft drinks. This is because of the perception of Asian speciality drinks as healthy and tasty beverages. Nevertheless, the competition among Asian speciality drinks categories might grow. For example, Asian juice drinks might compete with Asian still RTD tea or cereal/pulse-based drinks as all of them offer consumers health benefits and refreshing tastes.

• The unit prices of Asian speciality drinks are expected to continue increasing in current value terms, partly due to the entry of new products. Moreover, an expected high inflation rate and increasing raw material costs will affect prices across soft drinks.

CATEGORY DATA

HEADLINES

• Off-trade volume sales increase by 13% in 2010 to reach 198 million litres

• Small manufacturers are forced to close due to unsafe and insanitary bottled water production

• Still bottled water registers the highest off-trade volume growth of 14% in 2010

• The average unit price increases in current value terms in 2010 due to high inflation and rising transportation and production costs

• La Vie Joint Venture Co continues to lead with a 26% share of off-trade value sales in 2010

• Bottled water sales are expected to grow by a 15% off-trade volume CAGR over the forecast period

TRENDS

• Tighter government controls saw many small private manufacturers of bottled water forced to close down in 2008-2010. These producers failed to meet the required health standards issued by the Ministry of Health. These closures affected the confidence of consumers in bottled water products. As such, total volume sales grew fastest in the first two years of the review period. Moreover, growth was much slower than in the early 2000s.

• In 2010, bottled water sales grew by 15% in off-trade value terms, faster than the review period CAGR. This was due to increasing health and wellness concerns. Consumers became increasingly aware of food safety and hygiene. Thus, some people switched to bottled water instead of boiling their own water to kill bacteria. Moreover, fresh water in some areas, especially suburban areas, was unfit for consumption. Some water in these areas had an opaque colour and bad odour. Hence, many people shifted to bottled water if they could afford to.

• Still bottled water recorded the highest off-trade volume growth of 14% in 2010. The taste of this type of bottled water is more familiar to Vietnamese consumers. Manufacturers continued to offer a wide range of packaging sizes, including 350ml and 500ml, 1.5 litres, 5 litres and 19 litres to cater to different consumer needs. La Vie Joint Venture and Saigon Pure Water Pte Enterprise focused on improving their customer services and call centres in order to respond to consumers’ demands in a quick and professional manner. This strategy was aimed at tapping into the rising demand for bottled water and gaining competitive advantages.

• Carbonated bottled water accounted for a small share of total volume and value sales of bottled water, although such products have been present in Vietnam for over 10 years. Carbonated bottled water’s taste does not appeal to a wide range of consumers, but some people believe it offers digestive benefits. Besides an unappealing taste, carbonated bottled water is not considered suitable for people with gastric problems. Thus, the consumer base of carbonated bottled water is relatively limited.

• The off-trade channel accounted for a 42% share of volume sales in 2010. Retail has experienced decreasing volume sales share over the review period. This is mainly because the development of the soft drinks industry has provided consumers with a wider choice of thirst quenching beverages. Thus, bottled water has to compete with alternatives such as RTD tea and fruit/vegetable juice. The demand for bottled water from offices and hospitals consumption remained high, which benefited on-trade establishments.

• The average unit price of bottled water increased slightly in current value terms in 2010 due to inflation and higher manufacturing costs. However, most manufacturers tried to maintain stable prices as they feared that consumers would switch back to using home boiled water.

• Flavoured bottled water is not popular in Vietnam and sales remained negligible in 2010. The only major flavoured bottled water brand is H2OH! (PepsiCo Vietnam). Consumers perceived the taste of H2OH! to be quite similar to that of 7-Up or Sprite. Consequently, the appeal of H2OH! was quite limited given the established positions of 7-UP and Sprite in soft drinks in Vietnam. There was no presence of functional bottled water or sports waters in Vietnam at the end of 2010.

COMPETITIVE LANDSCAPE

• La Vie Joint Venture leads bottled water with a 26% share of off-trade value sales in 2010. The company benefits from strong marketing activities and a nationwide distribution network. The La Vie brand is very popular with consumers because of its offer of good quality products at reasonable prices, and long-standing presence in the country. La Vie Joint Venture advertised constantly via various media channels, including television, and newspapers, and magazines. Most advertisements focused on building brand personality for La Vie, promoting a refreshing and healthy image, instead of showcasing products directly.

• PepsiCo Vietnam (Aquafina brand) consolidated second position with a 17% share of off-trade value sales, followed by Saigon Pure Water (Sapuwa) with a 16% share. Aquafina and Sapuwa are popular thanks to their consistently good quality products, advertising activity and good distribution systems. As Saigon Pure Water had a lower advertising budget than PepsiCo, it focused on building a professional and friendly call centre operation and maintaining low prices to attract customers. In addition to lower prices, Saigon Pure Water offers a free delivery service and flexible deposit schemes.

• In 2010, La Vie Joint Venture and Vinh Hao Mineral Water JSC registered the biggest increases in retail value sales. La Vie launched its new La Vie Sparkling carbonated bottled water to tap into health and wellness trend. As carbonated bottled water is not very popular, the company added instructions on how to use the product to make other drinks, such as carbonated lemon juice or cocktails. On the other hand, Vinh Hao Mineral Water revamped its brand with a new logo and packaging to provide a modern image for its products.

• The competitive landscape in bottled water has a good balance between multinational and local players. The three main multinationals, La Vie Joint Venture, PepsiCo Vietnam and Coca-Cola Beverages, account for a combined 53% share of retail volume sales in 2010, while the remaining shares are dominated by domestic manufacturers. Although consumers are aware if a brand is local or a multinational, based on advertisements and PR activities, this did not seem to affect their purchasing decisions as much as factors such as convenience, taste and price.

• In 2010, no significant product innovation was observed in bottled water, as the demand from consumers is not very sophisticated.

• While most leading brands were positioned in the economy or mid-priced segments, a few international brands were focused on the premium segment, for example Evian, Laska and Perrier. These brands serve a very niche consumer base, as most people are unwilling to spend heavily on bottled water.

PROSPECTS

• Despite the growing penetration of perceived healthy soft drinks, such as RTD tea and fruit/vegetable juice, bottled water is expected to maintains a strong position in the industry in the short term. This is because bottled water is considered a good and low-priced choice by consumers looking to quench their thirst. As a result, bottled water sales are anticipated to grow by 16% total volume CAGR and a 12% constant value CAGR over the forecast period. Bottled water’s performance will improve in line with the health awareness trend in Vietnam.

• The government will continue to tighten its control over bottled water production to ensure that all products sold in the country meet the required health standards and are safe for consumption. The closure of many small private producers in 2008-2010 saw consumers become more careful when choosing. This is leading to consolidation, and big players like La Vie Joint Venture and PepsiCo Vietnam are likely to benefit most from this trend.

• Over the forecast period, still bottled water is predicted to record the highest on- and off-trade volume growth as consumers gradually shift from home boiled water to packaged products. Bottled water production must include antibacterial processes and it is believed to be cleaner than home boiled water. Moreover, lower prices and a more appealing taste compared to carbonated bottled water, will help still bottled water to penetrate Vietnamese households at a faster rate.

• Over the forecast period, the average unit price of bottled water is predicted to increase in current value terms due to higher transportation and electricity and water costs. In addition, the government appears quite ineffective in controlling inflation, which will contribute to unit price hike. However, in constant value terms, unit prices are set to decrease as manufacturers enjoy higher economies of scale thanks to rising demand. Moreover, players will try to keep their prices as stable as possible in order to compete as consumers are quite price sensitive towards bottled water.

• Over the forecast period, premium brands might enjoy a stronger presence thanks to a rising class of affluent consumers, who may be interested in brand such as Perrier and Evian to show off their status. Concurrently, private label is expected to see some development, especially from major retailers, including Big C, Lotte Mart and Co.opMart, which will diversify the offer to consumers.

• It will be hard for players to challenge the leading positions of La Vie Joint Venture and PepsiCo Vietnam, which invest in advertising and PR activities, and enjoy wide distribution networks and strong brand names. However, companies may try to look at untapped opportunities, such as flavoured and functional bottled waters to find new growth opportunities.

CATEGORY DATA

Institutional Bottled Water Sales

• Institutional bottled water maintained robust growth rates in 2010 thanks to the soaring number of offices buildings in Vietnam. Moreover, door-to-door delivery services provided by the major brands, such as La Vie, Sapuwa, and Vinh Hao, contributed to the fast growth of institutional bottled water sales.

HEADLINES

• Total current value sales increase by 4% in 2010

• Demand decreases due to growing health awareness

• Low calorie carbonates registers the fastest total volume and value growth in 2010

• In 2010, the average unit price continues to increase because of inflation and rising transportation costs

• PepsiCo Vietnam and Coca-Cola Beverages continue to dominate carbonates in 2010

• Carbonates is expected to register negative sales growth in total volume and value terms over the forecast period

TRENDS

• In 2010, carbonates lost favour as Vietnamese consumers became more conscious about health and wellness issues. Increasing living standards, together with rising household income and better education, promoted healthier lifestyles in Vietnam. Moreover, government offices and local clinics issued warnings on the risks to health caused by the consumption of fast food, carbonates, and confectionery, thereby raising awareness of obesity. As a result, Vietnamese consumers, especially young working adults, started to reduce their intake of carbonates and fast food. Hence, more consumers chose fruit/vegetable juice or RTD tea as healthier options.

• Leading brands such as Pepsi and Coca-Cola advertised continuously through various media channels to encourage consumption. At the same time, they concentrated on developing low calorie cola carbonates and juice-based carbonates to respond to the increasing demand for healthier drinks in Vietnam. For example, both PepsiCo Vietnam and Coca-Cola Beverages announced plans to increase their production of juice-based carbonates during 2009-2010.

• Although the consumption of carbonates declined during the review period, carbonates remained the most popular drink in restaurants, hotels and at parties due to their wide acceptance. Carbonates registered the fourth highest off-trade volume sales in 2010, behind Asian speciality drinks, RTD tea and bottled water. Besides its widely popular taste, some consumers believe that carbonated drinks help them to digest food more easily and ease flatulence. In addition, the rising number of fast food outlets by players such as Lotteria, KFC and BBQ Chicken enabled carbonates to record on-trade volume and value growth in 2010.

• In 2010, low calorie cola carbonates enjoyed the fastest total volume and value sales growth, in line with the rising awareness of obesity and dental health issues. Sales increased by 10% in off-trade value terms and 12% in on-trade value terms in 2010. Both off- and on-trade volume sales grew by 9%. Despite rapid growth, the range of low calorie cola carbonates is quite narrow. Only Pepsi and Coca-Cola offer a variety of such as local companies do not have the necessary production technologies. Given the diminishing consumption of carbonates in general, local companies are reluctant to invest in this product type.

• Despite manufacturers efforts to keep down prices, through discounts and promotions, to counter shrinking demand and tough competition from potential substitutes, high inflation resulted in unit price increases in 2010. Higher transportation costs and the weakened local currency also contributed to increasing unit prices of carbonates as most raw materials are imported.

• In 2010, on- and off-trade value sales outperformed 2009 levels due to higher unit prices. However, on- and off-trade volume sales grew at the same rates, resulting in the continued decrease in total volume sales as carbonates consumption fell. On-trade sales recorded the better growth performances, compared to off-trade sales, thanks to the fast emergence of fast food in Vietnam.

• Fountain sales remained negligible as fountain machines are not very common in Vietnam. Fountain sales are offered by only a few fast food brands such as KFC, Lotteria and BBQ Chicken. Other major players such as Pizza Hut and Pizza Inn did not offer fountain sales.

• Organic and fortified/functional carbonates were not present in Vietnam in 2010, despite growing awareness about health and wellness issues. Declining volume sales of carbonates, together with the stronger presence of RTD tea, made manufacturers unwilling to invest in developing organic or fortified/functional carbonates in Vietnam. Players preferred to divest to other soft drinks with higher growth potential.

• In Vietnam, the key consumers of carbonates are teenagers and children as they are less aware or concerned about health issues. They normally drink carbonates on special occasions such as birthdays or weddings, on holiday or when hanging out with friends, often in fast food outlets.

COMPETITIVE LANDSCAPE

• In 2010, PepsiCo Vietnam remains the leading player with a 45% share of off-trade value sales, followed by Coca-Cola Beverages with a 39% share. PepsiCo enjoys wide distribution across the country, and successful marketing campaigns. The company is attentive to changes in the market and it implements marketing strategies accordingly. In the past, PepsiCo’s advertisements have featured young, famous globally-recognised singers, such as Beyonce, F4 and Britney Spears, to appeal to the target consumer group, teenagers. During the review period, however, the focal point of advertising was on friendships and the dynamism of youth. Its advertisements featured famous local singers, such as Thien Vuong, My Tam and Kasim Hoang Vu, in order to create a feeling of intimacy with Pepsi products.

• Coca-Cola Beverages entered Vietnam after PepsiCo, which had already established a good distribution network. In addition, the flavour of Pepsi seemed to suit the taste of Vietnamese consumers. More importantly, the marketing campaigns in support of Pepsi showed more understanding of local consumers and their habits compared to Coca-Cola. For example, the first Pepsi advertisements featured local football players and used the slogan “Drinking Pepsi is supporting the Vietnam national soccer team”. As a result, Pepsi easily caught the attention of consumers because of the passion for football in the country. On the other hand, Coca-Cola’s advertisements featured global images, which seem to appeal less to the mass of consumers in Vietnam.

• Another dynamic brand is Orangina, distributed by Multinational Food & Beverage Corp. A juice-based carbonates, Orangina is portrayed as healthier and more nutritious than alternative carbonates. Hence, Orangina slowly increased its retail volume and value share over the review period in line with the growing health and wellness trend in Vietnam.

• When first introduced in Vietnam, carbonates was dominated by local players, such as Saigon Beverages JSC (Tribeco). Nevertheless, PepsiCo’s launch of Pepsi in 1991 showed that it would not be difficult for major internationals to gain shares quickly. PepsiCo set its prices lower than the competition in order to raise brand awareness. Moreover, the company focused on building a good distribution network because it believed this to be an important key to success, according to its experiences in other markets. With strong financial support from the GBO, PepsiCo Vietnam rapidly attained the leading position in carbonates.

• In order to respond to the increasing competition from multinational players, local companies were forced to switch to other products, such as soya milk. At the end of the review period, multinational companies dominated off-trade volume and value shares in carbonates. Meanwhile, local companies such as Chuong Duong Beverages JSC and Tribeco have developed a more diversified product range, including soya milk and RTD tea, to avoid competing directly with giant multinationals in carbonates.

• In April 2010, AJE Group officially launched Big Cola. Unlike the entries of PepsiCo and Coca-Cola, the entrance of Big Cola was accompanied by quiet marketing activities and PR events, such as billboard and POS posters, with little television exposure. AJE Group persuaded retailers to sell Big Cola by offering high commission rates. Big Cola is present in a wide range of grocery channels such as supermarkets/hypermarkets, independent small grocers, and street vendors in Vietnam. In 2010, Big Cola offered three variants: standard regular cola, non juice-based orange carbonates, and non juice-based lemonade.

• The short-to-medium term performance of Big Cola is uncertain as carbonates is mature with relatively low growth potential. Nonetheless, the brand is expected to create new challenges for multinational and local competitors. The brand’s foreign image, while offering prices as low as some local competitors, appears to provide Big Cola with competitive advantages. Thus, existing players are predicted to employ dynamic strategies and activities to try to retain shares.

• Most of the key advertising campaigns featured the football World Cup as their main theme in 2010. In addition, PepsiCo launched the “Pepsi Ðã” (Pepsi Satisfaction) competition, which required consumers to send in short slogans to express the “happy, passionate and successful” experience of consuming Pepsi. The company offered winning entries attractive prizes. The campaign targeted at teenagers and under 25-year-old adults with colourful and playful images.

• In 2010, there was no significant packaging innovation, due largely to the maturity of carbonates. 300ml glass bottles and 330ml metal cans were the most popular pack types in the retail market.

PROSPECTS

• Over the forecast period, Vietnamese consumers will become more health conscious, in conjunction with higher living standards and rising dispensable income. Calorie intake will become a major concern as people try to prevent heart diseases and dental problems. This suggests a reduction in carbonates consumption. The development of many healthier alternatives in soft drinks, such as RTD tea and fruit/vegetable juice also give consumers much more choice than before.

• It is anticipated that carbonates will register off-trade sales decline in both value and volume terms due to the decreasing consumption trend. On the other hand, on-trade volume sales are expected to grow because of the increasing number of fast food outlets in Vietnam, which should stimulate consumption opportunities for carbonates. Vietnamese consumers tend to be less concerned about health aspects when dining out or when attending parties and others social gatherings.

• Over the forecast period, the average unit price of carbonates is predicted to continue to increase in current value terms due to inflation. In 2010, the government announced the possibility of increased prices of electricity and water in 2011, which would raise production costs. However, in constant value terms, the average unit price is projected to decrease thanks to large economies of scale and the maturity of carbonates in the country.

• In spite of the expected overall sales decline in carbonates, low calorie cola carbonates is predicted to record strong growth. Over the forecast period, total sales are projected to grow by a 9% volume CAGR and a 7% constant value CAGR. The reason for this anticipated good performance is that low calorie cola carbonates are considered a good replacement for standard regular cola. Some consumers find it hard to give-up drinking carbonates due to the unique flavour. Hence, they might switch to low calorie alternatives if they are concerned about health issues.

• Pepsi and Coca-Cola are expected to maintain their leading positions in carbonates due to their popular brand names and established presence in the country. However, they might encounter tougher competition as AJE Group may expand its activities in Vietnam. In addition, Big Cola’s lower prices could encourage consumers to choose Big Cola instead of Pepsi and Coca-Cola, especially in rural and suburban areas.

CATEGORY DATA

HEADLINES

• In 2010, off-trade RTD volume sales grow by 8% to reach a value of VND98.4 billion

• Concentrates remains a very niche category with low volume and value sales

• Powder concentrates records the highest RTD volume growth of 9% in 2010

• The average unit price increases in line with inflation and rising production costs in 2010

• Imported brands dominate liquid concentrates while multinationals dominate powder concentrates in 2010

• Sales of concentrates are expected to grow by a 10% off-trade RTD volume CAGR over the forecast period

TRENDS

• Concentrates are not as popular as some other soft drinks due to the negative consumer perception of these products. Many consumers believe that concentrates have high sugar content, while offering little in terms of nutritional value. As a fruit producing country, consumers in Vietnam strongly prefer juice that made from freshly squeezed fruit, rather than concentrates which usually contain added artificial flavours and colouring.

• Powder concentrates has much higher RTD volume sales than liquid concentrates thanks to the popularity of instant tea products, such as Nestea (Nestlé Vietnam Ltd) and Lipton (Unilever Vietnam International Co Ltd). Consumers choose these drinks as thirst quenchers. Besides, powder concentrates received a boost in terms of brand awareness thanks to the promotional activities of companies for their RTD tea products.

• In 2010, both powder and liquid concentrates recorded stronger total volume and value growth than in 2009. This was largely due to the extremely hot weather that the country experienced in the final year of the review period. Many consumers turned to concentrates as a quick, cheap and tasty thirst quenching alternative. Moreover, various discounting and advertising initiatives, used by manufacturers to stimulate consumption, boosted growth in 2010.

• Although concentrates is far from reaching maturity due to low per capita consumption, growth was restrained during the review period by tough competition from other types of soft drinks, especially RTD tea and fruit/vegetable juice. As concentrates offer little benefit outside of thirst quenching, demand was restricted.

• There were new product developments in 2009-2010 as manufacturers and distributors tried to tap into the concerns about health and wellness, launching, for example, new sugar-free liquid concentrates. However, as few local players focus on concentrates, most of the new product developments were provided by imported brands. The high prices of new imported products also limited sales, and concentrates did not witness a major hike in consumer demand.

• In 2010, the average unit prices of powder and liquid concentrates increased in current value terms due to high inflation of 12%, compared to 7% in 2009. Higher electricity and water prices, together with rising costs of raw materials increased manufacturing overheads for domestic players. At the same time, imported brands faced a higher exchange rate between the US dollar and Vietnam dong.

• The consumption of concentrates in the on-trade channel is negligible. It is widely considered cheaper to make beverages from scratch using loose tea or fresh fruit instead of using concentrates. In the retail channel, consumers usually bought powder and liquid concentrates from supermarkets/hypermarkets and independent small grocers. The key purchasers of concentrates are teenagers and young working adults, who value the convenience offered by these products.

COMPETITIVE LANDSCAPE

• In 2010, Nestlé Vietnam continues to lead concentrates with a 41% share of off-trade value sales. It was the first player to launch instant ice tea in the country through Nestea, which gained popularity quickly thanks to strong advertising and PR efforts. After more than 10 years in the market, and despite facing tougher competition from many new players, the company maintain high brand awareness for Nestea through continuous promotional activities. For instance, in 2010 Nestlé Vietnam offered a free bottle of Nestea to consumers spending VND50,000 or more on its products.

• Unilever Vietnam International is the second-ranked player with a 27% share of off-trade value sales in 2010. Despite a marginal decline in off-trade value share in 2009, the company increased its share slightly in 2010 thanks to various marketing activities in support of Lipton Ice Tea. For example, Lipton Ice Tea booths were set-up in front of supermarkets/hypermarkets and wet markets to offer consumers free samples and invite them to participate in attractive prize draws.

• In spite of its efforts, Unilever Vietnam International was unable to make significant inroads into Nestlé Vietnam’s lead. This is mainly because Lipton Ice Tea was launched after Nestea had attained a strong foothold in the market. Furthermore, Nestea is perceived to be tastier and more refreshing than Lipton.

• Kraft Foods registered the biggest increase in retail value sales in 2010 as consumers paid more attention to Tang powder concentrates. In the midst of the H1N1 flu crisis, Vietnamese consumers felt the need for vitamin drinks, to boost their metabolism and immune system in order to prevent sickness. Tang powder concentrates, with its original orange flavour, contains vitamin C. Therefore, consumers consumed Tang as a daily and quick vitamin C top-up.

• International players dominate concentrates, both powder and liquid. In powder concentrates, the popularity of Lipton and Nestea presented a high barrier to other brands looking to enter Vietnam. A local company, Ecological Product JSC, made an unsuccessful attempt to launch powder concentrates products in 2007. In 2010, it re-entered powder concentrates, focusing on flavours other than iced tea to avoid direct competition with the two giant multinational brands. However, with a smaller advertising budget compared to the multinational players, the performance of Ecological Product remained uncertain.

• In liquid concentrates, imported brands, Nana and Golden Pan, dominated sales. Some local players, such as Trinh Syrup and Shin Sang Agriculture Processing, were present. However, due to a lack of advertising and weak branding know-how, these local players did not gain a strong foothold in the category.

PROSPECTS

• Over the forecast period, sales of concentrates are expected to grow by a 10% off-trade RTD volume CAGR. This is faster than the review period CAGR. Increasingly hectic lifestyles might raise the demand for concentrates as they offer a cheap, quick and convenient thirst quenching solution. Besides, as consumers become more sophisticated through exposure to foreign cuisines, concentrates offer potential as they are good as mixers for drinks and cocktails.

• The major threat to forecast growth is the rising health and wellness awareness of consumers. As consumers are more educated about the nutritional value of the drinks they consume, they might be more willing to make drinks from scratch with fresh fruits and juices, which are perceived to be higher in vitamins and minerals. Thus, manufacturers might look to fortified concentrates to increase the consumers’ interest in their products. Sugar content is another important concern, and sugar-free products may appear in the forecast period.

• Concentrates are expected to encounter stronger competition from other RTD products, especially RTD tea and fruit/vegetable juice, which are also aimed at young and busy consumers. Another threat to forecast growth is rising prices of raw materials and costs of production.

• Powder concentrates is expected to continue to record higher off-trade volume growth than liquid concentrates, thanks to the popularity of instant iced tea by Nestea and Lipton. Lemon is still the most popular flavour of team among Vietnamese consumers.

• Manufacturers and distributors may need to employ more extensive and better marketing strategies to raise awareness of concentrates, especially liquid concentrates, and drive growth. In general, the consumer perception of these products is still not very positive, as they are held to offer little nutritional value and are most suitable for young people. Thus, more action is needed from industry players to improve perceptions and increase the awareness of and demand for concentrates.

CATEGORY DATA

Concentrates Conversions

• In 2010, the conversion ratio remained stable, compared to 2009: 1kg = 7 litres for powder concentrates; and 1-litre to 5 litres for liquid concentrates.

HEADLINES

• In 2010, off-trade volume sales increase by 20%

• Rising health awareness is the key driver of fruit/vegetable juice’s improved performance in 2010

• 100% juice registers the fastest total volume sales growth of 42% in 2010

• The average unit price increases in 2010 due to inflation

• Vinamilk remains the leading brand in 2010

• Over the forecast period, off-trade volume sales are expected to grow by a 16% CAGR

TRENDS

• In 2010, fruit/vegetable juice became more popular as Vietnamese consumers paid more attention to healthier drinks. They believe that these products are high in vitamins and minerals which are good for their skin and general health.

• In 2010, total volume sales grew by 20%, compared to a 16% increase in 2009. Although packaged fruit/vegetable juice has been present in Vietnam for more than 10 years, it did not receive high attention from consumers due to the popularity of carbonates. Moreover, consumers tended to consider eating fresh fruit to be a better option than drinking packaged juice. However, the ongoing maturity of carbonates, increasingly busy lifestyles, and rising health and wellness awareness have made consumers more receptive to the nutritional and convenience benefits of fruit/vegetable juice.

• 100% juice recorded the fastest total volume growth in 2010 despite carrying the highest unit prices. Higher average incomes have made 100% juice more affordable than in the past. Consumers choose reconstituted 100% juice because they believe is fresher and healthier than other types of fruit/vegetable juice, which are thought to contain preservatives and added artificial flavours.

• In 2010, the average unit price of fruit/vegetable juice increased due to inflation and higher transportation costs. Furthermore, the devaluation of the local currency against the US dollar led to higher unit prices as many fruit/vegetable juice brands are imported.

• Nectars and juice drinks also recorded faster total volume sales growth in 2010 compared to 2009, in line with rising health awareness. 100% juice is usually available in 1-litre liquid cartons, while unfrozen nectars and juice drinks are more flexible in terms of pack sizes and formats. Unfrozen nectars and juice drinks are usually consumed in restaurants or cafés as thirst quenchers due to their lower prices and convenience aspects, while 100% juice is usually consumed at home.

• Orange and apple are among the most popular flavours. Most consumers are familiar with these traditional flavours and they are easy to drink and match with different types of food. In addition, many people believe that orange and apple juice products are higher in vitamins and minerals, compared to other flavours.

• The consumption of fruit/vegetable juice in the on-trade channel is much smaller than in the retail channel. This is mainly because consumers usually pay less attention to health aspects when dining out, or at parties and other social gatherings. Another main reason is that fruit/vegetable juice usually carries higher prices than standard drinks (usually carbonates or iced tea) in horeca outlets. Thus, consumers prefer to drink carbonates or iced tea in on-trade establishments.

• Sales of smoothies remained negligible in 2010. There were only a few products available. Moreover, almost all were dairy-based smoothies, and thus were not classified under soft drinks. Some famous smoothie products include V-Fresh Orange and Strawberry from Vietnam Dairy Products. Manufacturers paid little attention to smoothies as fresh smoothies can easily be found in cafés in most of the country’s major cities.

COMPETITIVE LANDSCAPE

• Vietnam Dairy Products leads thanks to its well-known and trusted Vinamilk brand name and strong distribution network. Local consumers were familiar with many of Vinamilk’s products, including baby food and dairy products, before Vietnam opened its doors to multinational players. With its long-established presence and high experience, the company was able to build a nationwide distribution network, reaching from major cities to rural areas, able to satisfy consumers throughout Vietnam.

• In 2010, Vietnam Dairy Products recorded the biggest sales growth in 2010. Company sales grew by 54% in off-trade value terms to reach a 22% share and by 56% in off-trade volume terms to reach a 20% share. Although it was producing fruit juice long before the review period, Vietnam Dairy Products only started to focus on fruit/vegetable juice from 2008-2009. Recognising the strong growth potential of fruit/vegetable juice, the image of its whole range was revamped, with new packaging design, a new name and advertisements targeted at more sophisticated and modern consumers. The success of this strategy enabled the company to record dynamic sales growth, overtaking Interfood Shareholding Co and Dona New Tower JV Co to become the leading player in off-trade volume and value terms in 2010.

• In mid-2010, Coca-Cola Beverages relaunched Minute Maid as Minute Maid Teppy, offering products containing real fruit pulp. With strong advertisements and marketing events, the new products gained some attention. However, fruit juice with real pulp is not a new concept in Vietnam, and the new offering recorded only slight off-trade value share growth.

• Domestic players performed better than international manufacturers in 2010. This is largely because domestic manufacturers, such as Vietnam Dairy Products and Dona New Tower, possess wide distribution networks and long-established histories in the country. Moreover, most domestic manufacturers offer similar quality products to multinational brands, but at lower prices. For example, 1-litre V-Fresh is priced at VND24,000, compared to VND36,000 for 1-litre Malee. Thus, it is easier for local players to tap into the mass market.

• In 2010, one of the most notable new product developments was Casino Bio, Big C’s new private label. Made from organic fruits and vegetables, Casino Bio’s prices are above-average at VND45,000 per 1-litre glass bottles. Besides high pricing, low consumer awareness of organic produce and its benefits represents a challenge to the new private label in fruit/vegetable juice. However, Casino Bio has added diversity to the category and it appeals to the niche of wealthy consumers who are searching for premium quality products.

• During the review period, Casino and Casino Bio appeared to be the only major private labels in fruit/vegetable juice. They offer premium products, imported from France. Casino Bio can be considered the first mainstream organic product line in the country.

PROSPECTS

• With improving living standards and better education, consumer awareness of health and wellness issues is expected to continue to rise. Some consumers, especially females, are likely to become more concerned about their calorie intake. As a result, fruit/vegetable juice will gain popularity thanks to its various health benefits, such as high fibre content and skin care properties. Over the forecast period, total volume sales of fruit/vegetable juice are expected to grow by a 16% CAGR, only slightly slower than over the review period.

• More brands will enter fruit/vegetable juice in Vietnam in the forecast period in response to growing demand. Domestic brands will face strong competition from international competitors. Despite higher prices, imported brands can quickly gain the attention of consumers. Vietnamese consumers tend to perceive international brands to be higher in quality than local alternatives. Consequently, domestic manufacturers such as Vietnam Dairy Products and Saigon Beverages need enhance their branding and marketing activities to maintain the trust and loyalty of Vietnamese consumers.

• 100% juice is projected to register the fastest total volume and value sale growth over the forecast period. International brands such as Malee, Ceres, Tipco and Welch’s focus on 100% juice, and they are expected to grow shares by strengthening their distribution networks and discounting activities. Another reason for the faster expansion of 100% juice is the growing middle- and high-income population in Vietnam, particularly in big cities. These consumers are the key purchasers of reconstituted 100% juice.

• The rate of inflation is anticipated to have a big effect on the Vietnamese economy, as electricity and water bills are set to increase. In addition, the local currency is losing value to the US dollar. Hence, unit prices of fruit/vegetable juice are predicted to increase in current value terms over the forecast period as most of these products are imported.

• According to the company’s annual report, Vietnam Dairy Products might introduce new products or improvements in fruit/vegetable juice over the forecast period, in order to respond to the rising health and wellness awareness. For example, manufacturers are likely to expand their portfolios with more juice flavours to give local consumers more choice. More vitamins and minerals will also be added to juice to satisfy the increasing demand for healthier products from consumers.

CATEGORY DATA

HEADLINES

• Retail sales grow by 11% in volume terms and 21% in current value terms in 2010

• Off-trade volume growth slows down in 2010 as some consumers lose interest in RTD coffee

• The average unit price increases significantly in current value terms in 2010 due to inflation, higher currency exchange rates and rising transportation costs

• Ajinomoto Co Inc remains the leading player with a 41% share of off-trade value sales in 2010

• As more RTD coffee brands enter Vietnam, off-trade volume sales are expected to grow by a 13% CAGR over the forecast period

TRENDS

• RTD coffee recorded slower off-trade volume growth in 2010: sales increased by 11%, compared to 18% in 2009 and 31% in 2008. Despite manufacturers’ efforts to push sales, such as advertising in newspapers and on TV, RTD coffee was hampered by its taste, which is perceived to be less appealing than instant or filter coffee. As a traditional coffee drinking country, consumers in Vietnam demand good quality coffee, and RTD coffee is widely perceived to fall short in this respect. Thus, retail volume growth slowed down significantly after the hype of 2007-2008, which was caused mostly by consumer curiosity as many new brands appeared on retailers’ shelves.

• Although RTD coffee is considered inferior to other coffee formats in terms of taste, it is unrivalled in terms of convenience. Thus, RTD coffee enjoys a niche demand from busy urban consumers, who like to consume the product on the go or during busy working hours.

• Despite a slowdown in volume consumption, several big coffee brands, such as Highlands (Viet Thai International Joint Stock Co) and Nescafé (Nestlé) entered RTD coffee in 2009-2010. These big brands have yet to have a significant effect on RTD coffee in Vietnam, but their presence suggests that major players see some growth potential, especially given the increasingly busy lifestyles of urban consumers.

• In 2010, most RTD coffee products were imported. Thus, pricing was strongly affected by factors such as rising oil prices and higher transportation, electricity and water costs and the higher exchange rate between the US dollar and Vietnam dong. Thus, the average unit price increased by 9% in off-trade current value terms in 2010.

• As RTD coffee’s main advantage is its convenience format, the key purchasers are young working adults, especially females. Male consumers usually prefer the strong and bitter taste of fresh ground coffee, and they are not easily satisfied with RTD coffee’s milder taste, while many females like their coffee mild and sweet. Male coffee drinkers also feel that RTD coffee does not contain sufficient caffeine, while female consumers like the lower caffeine content, for health and beauty reasons.

• In 2010, RTD coffee was mostly consumed in the retail channel, largely because of its convenience. There is no strong and connected distribution network for RTD coffee, and such products are found only in some big cities, eg Ho Chi Minh City, Hanoi and Da Nang.

COMPETITIVE LANDSCAPE

• Ajinomoto (Birdy brand) remains the leading player in retail value sales terms, with a 41% share in 2010, followed by Dona New Tower with a 32% share. Introduced to Vietnam in 2008, Birdy has quickly become one of the most active brands in terms of marketing. Ajinomoto occasionally advertised Birdy RTD coffee on television, while investing in other promotions and PR initiatives to encourage consumers to try its products. Long-established players such as Dona New Tower (Nature), the leader in retail volume sales terms, and Interfood Shareholding (Wonderfarm) offered little marketing support to their RTD coffee products.

• Of the three top players, only Ajinomoto recorded off-trade volume or value share growth in 2010. The company benefited from strong marketing activities. However, “others” recorded the highest share increases due to the entry of new players. In November 2009, Nestlé Vietnam launched new RTD coffee products under its well-known Nescafé umbrella brand. The company carried out a large scale marketing campaign, which involved giving out 100,000 cans of Nescafé as part of a free trial. Nescafé’s RTD coffee was widely accepted by local consumers thanks to its delicious taste and trusted brand name in hot coffee. In the short term, Nescafé is expected to become the main competitor to Birdy.

• The entry of Nescafé in RTD coffee has consolidated the dominance of multinational brands, including Birdy and Wonderfarm. A major local coffee brand, Highlands, also entered RTD coffee at the end of the review period. However, as the demand for RTD coffee is still low, few other players were interested in this soft drinks category.

• As RTD coffee is still at a very early stage of development, the boundaries between premium, standard and economy brands are unclear. Most RTD coffee products are priced at VND5,000-VND7,000 per 240ml can. Given their bigger marketing efforts, Birdy and Nescafé are perceived as premium offerings, compared to the competition.

PROSPECTS

• With the participation of new brands such as VIP by Tan Hiep Phat, Nescafé and Highlands, the competitive landscape is expected to become fiercer. Most manufacturers are likely to pay attention to marketing and PR activities to raise awareness for their brands and gain sales shares.

• Over the forecast period, RTD coffee is expected to see accelerated growth. Retail volume sales are projected to grow faster year-on-year, resulting in a 13% CAGR. The higher number of brands and product innovations will create more consumer interest in this product type, thereby boosting awareness and sales. Moreover, tougher competition will drive the development of higher quality, better tasting products. This would increase the acceptance of consumers for RTD coffee.

• Many consumers already recognise RTD coffee’s unique selling points: convenience, portability and anywhere, anytime consumption. However, to ensure the success of RTD coffee in Vietnam, manufacturers need to pay attention to product quality and taste. Local consumers tend to be very demanding of their coffee, preferring strong, flavoursome products, such as traditional filter coffee. Thus, the players that are able to respond to the demands of consumers might gain competitive advantages.

• Inflation is predicted to remain quite high, while electricity and water prices are expected to continue increasing over the forecast period. As a result, the average unit price of RTD coffee is projected to rise in current value terms. Moreover, as consumption is still low, manufacturers and distributors do not have sufficient economies of scale to bring down costs. Thus, it will not be surprising if RTD coffee sees current value price hikes in the forecast period.

CATEGORY DATA

HEADLINES

• Sales grow by 38% in off-trade volume terms in 2010

• RTD tea remains the preferred soft drink in Vietnam thanks to its health positioning

• Asian still RTD tea records the fastest off-trade volume growth of 38% in 2010

• The average unit price increases in line with inflation in 2010

• Tan Hiep Phat leads with a 41% share of off-trade value sales in 2010

• Over the forecast period, RTD tea sales are expected to grow by a 22% off-trade volume CAGR

TRENDS

• In 2010, RTD tea continued to record the fastest total volume growth in soft drinks in Vietnam. Consumers remained interested in RTD tea thanks to its refreshing and healthy image. RTD tea sales increased by 34% in total volume sales in 2010. Although this growth was much slower than the review period CAGR due to maturity, it represented a strong performance and the potential for further opportunities.

• Although RTD tea was present in the country long before the 2000s, it only started to develop fast from 2006 when Tan Hiep Phat launched Zero Degree Green Tea. This launch was accompanied by extensive nationwide marketing activities via various media channels. Thus, consumer interest in RTD tea was raised quickly at a time when many soft drinks categories, such as carbonates, had matured. Therefore, good timing, as well as interesting advertisements and successful consumer segmentation, lay behind the success of RTD tea in Vietnam.

• While green tea, in jasmine, lemon and honey flavours, remained the most popular type of RTD tea, herbal recorded the biggest off-trade volume share growth in 2010. Introduced in 2008, through brands such as Dr Thanh and Tam Thanh, herbal’s retail volume share of sales has reached 13%. In 2008, Vietnam was hit by many packaged food and drinks safety scandals, therefore herbal RTD tea managed to capture the attention of consumers thanks to its natural image. For instant, Dr Thanh was advertised as a drink made from nine different kinds of Eastern herbs, which had body cooling effects.

• Asian still RTD tea accounted for almost all retail volume sales in 2010. Most of the innovation in RTD tea over the review period occurred in the Asian still format. In fact, still RTD tea excluding Asian registered slower growth in the second half of the decade compared to the early 2000s due to tougher competition from Asian still RTD tea.

• In 2010, the average unit price of RTD tea increased in current value terms in Vietnam. High inflation, along with higher oil, electricity and water prices raised production costs. Consequently, most manufacturers were forced to raise prices, although they tried to limit increases. Increased prices did not have big effect on the consumption of RTD tea in Vietnam, however. RTD tea is a highly popular beverage which has gained the loyalty of consumers through its healthy image and fresh taste.

• The off-trade channel accounted for a 65% share of volume sales of RTD tea in 2010. Consumers can easily purchase RTD tea products from any grocery retailer, including supermarkets/hypermarkets, independent small grocers, and wet markets, in individual bottles or bulk formats. There was no significant difference in the price of RTD tea in terms of retail format.

COMPETITIVE LANDSCAPE

• Tan Hiep Phat continues to lead RTD tea with a 41% share of off-trade value sales in 2010. The company owes its leading position to aggressive marketing strategies and a good distribution network, but also technological innovation. The company invested heavily to launch the Enterprise Resource Planning (ERP) system from SAP in April 2010. This move reflected Tan Hiep Phat’s aim to boost its production rate and to reduce waste in order to enhance efficiency and product quality.

• TV advertising played a big part in Tan Hiep Phat’s marketing strategy. The company see this as a good way to raise consumer awareness and extend its consumer base. Each advertisement reflected the company’s knowledge of the market and the behaviour of local consumers. For example, Zero Degree Green Tea’s advertisements during its launch period focused on the natural freshness of the product on hot days. This advertising quickly captured the attention of consumers as few other brands offered similar themes. In 2010, the leading player launched a new advertising campaign for Zero Degree Green Tea, which focused on its relaxation and stress-relieving effects.

• In 2010, Pepsi-Lipton International enjoyed the biggest increase in retail volume and value sales thanks largely to the good performance of Lipton Pure Green Tea. Although the company only introduced Lipton Pure Green Tea in 2008, it quickly became popular. The brand leveraged on the strong nationwide distribution network of PepsiCo Vietnam to establish a presence in the market. Moreover. Most customers are familiar with the Lipton brand and name. As a result, Pepsi-Lipton International registered a 60% increase in off-trade value sales, while off-trade volume sales grew by 47%.

• Domestic manufacturers dominated RTD tea in Vietnam, holding 3-of-the-top-5 positions in 2010. The three leading local players accounted for over a 50% share of retail value sales. The main advantages that domestic companies enjoy over multinationals are an understanding of the local market and strong distribution networks throughout the country.

• In line with the health and wellness trend, Tan Hiep Phat launched Dr Thanh herbal RTD tea without sugar at the end of 2009. The company aimed to tap into the market potential of consumers who are highly concerned about their sugar intake, eg diabetics. Although the product did not register big success due to its acquired taste, it has opened new opportunities and created more competition venues in RTD tea.

• RTD tea is usually available in 500ml rigid plastic bottles. In 2010, the main price band for RTD tea was VND7,000-VND10,000 per 500ml. There was not much difference in price between domestic and international brands. However, there were some differences between green tea and herbal variants. Herbal RTD tea brands, such as Dr Thanh, are considered more premium than green RTD tea due to their ingredients. The average price of herbal RTD tea was VND8,000 per 350ml.

PROSPECTS

• Over the forecast period, the health and wellness trend will emerge more strongly thanks to rising household income and living standards. With better health education, consumers will be more careful with their food and drink intake. RTD tea will continue to appeal to consumers thanks to its various health benefits. More importantly, extensive marketing activities by the leading players, such as Tan Hiep Phat, URC Vietnam and Saigon Beverages, can be expected to stimulate consumption.

• RTD tea sales are expected to grow by a 22% off-trade volume CAGR over the forecast period. This is much slower than the review period CAGR as the category approaches maturity. Nonetheless, the fast rate of innovation in RTD tea might see stronger growth if players capture the consumers’ attention by launching more interesting products.

• Key trends that industry players should consider when launching new products in the short term are: rising health and wellness awareness; increasingly busy lifestyles and rapid urbanisation. To answer the consumer need for healthier products, sugar-free and fortified products might make an entrance.

• Asian still RTD tea is expected to continue to dominate RTD tea and to register the highest total volume and value growth rates over the forecast period. The taste of Asian still RTD tea is more suited to that of Vietnamese consumers. Given the success of Dr Thanh and Tam Thanh, other manufacturers might try to tap into the growth potential offered by herbal RTD tea. Nonetheless, still RTD tea excluding Asian is projected to record faster total volume growth over the forecast period, compared to the review period, as consumers seek more non-traditional RTD tea varieties.

• Over the forecast period, the average unit price of RTD tea is expected to increase in current value terms. This is due to rising production costs and the lower value of the local currency against the US dollar.

• The leading players, such as Tan Hiep Phat and URC Vietnam, might maintain their aggressive marketing activities in order to build brand awareness and gain company/brand shares. In response, smaller manufacturers might focus on distributing products in rural or suburban areas to avoid direct competition with leading brands.

CATEGORY DATA

HEADLINES

• Off-trade sales grow by 5% in volume terms and 8% in current value terms in 2010

• There is no significant product innovation in 2010

• Sports drinks registers the highest off-trade volume growth of 8% in 2010

• The average unit price increases in current value terms in 2010 due to high inflation and rising transportation costs

• PepsiCo Vietnam continues to lead with a 34% share of off-trade value sales in 2010

• Off-trade volume sales are expected to grow by a 3% CAGR over the forecast period

TRENDS

• Sports and energy drinks, particularly sports drinks, have a smaller consumer base than other soft drinks. Sports and energy drinks are not popular due to their high prices. Sports drinks were only popular among serious sports enthusiasts, with bottled water preferred because it is cheaper and more widely available. Energy drinks are usually consumed at special events like parties and other social gatherings, when people need an energy boost. As a result, the demand for sports and energy drinks is quite limited.

• In 2010, both sports drinks and energy drinks recorded faster total volume and value growth than in 2009. This was due to the increasingly active lifestyles of urban consumers. More private gyms and fitness centres are opening in Ho Chi Minh City and Hanoi, and more people see sport as a way of staying fit and healthy. Medium-to-high-income consumers account for a high portion of gym users. These consumers are willing to pay extra for sports drinks to rehydrate their bodies, instead of consuming bottled water. On the other hand, busier lifestyles drove the demand for energy drinks as consumers used them as energy boosters for parties or working.

• Sports drinks gained more acceptance as a result of the education campaign by PepsiCo Vietnam. The company launched various promotions for its 7-Up Revive brand on television, and in newspapers and magazines to introduce the sports drink and its benefits. PepsiCo featured popular celebrities, who told stories of playing sport, incorporating the consumption of 7-Up Revive within their story. The campaign not only promoted 7-Up Revive, it also drew attention to sports drinks in general.

• Similar to several other types of soft drinks, the average unit price of sports and energy drinks increased in current value terms in 2010 due to inflation and higher transportation costs. However, sports and energy drinks are more immune to price movements as consumers of these products seldom stopped drinking them or switched to alternatives simply because of pricing. The base of mostly middle-to-high-income consumers were willing to pay extra for the perceived benefits of sports and energy drinks, such as better rehydration during and after exercise, or energy boosts for work and play.

• The bulk of sports and energy drinks are sold through the off-trade channel, with only limited demand in the on-trade channel. Consumers usually purchased sports and energy drinks for personal consumption when at parties or the gym. The main consumer foodservice types for sports and energy drinks are coffee shops and restaurants, where people gather after school or work. Hence, they require an energy boost after a long day at work or school.

COMPETITIVE LANDSCAPE

• PepsiCo Vietnam, with Sting (energy drinks) and 7-Up Revive (sports drinks), continues to lead sports and energy drinks with a 34% share of off-trade value sales in 2010. Although Sting was launched after the entrance of the famous Red Bull brand, it gained the leading position in energy drinks in 2005, in off-trade value terms, thanks to strong advertising and PR activities, attractive packaging and a good distribution network. Due to a lack of promotional activities, Red Bull’s off-trade value share in energy drinks fluctuated over the review period to reach 24% in 2010.

• Sting recorded a 14% off-trade value CAGR in sports and energy drinks over the review period. Besides aggressive TV advertising, the brand was favoured for its pleasant taste, and offer of three flavours (kiwi, strawberry and ginseng). Some consumers simply chose Sting as a thirst quenching drink without any energy boosting purpose for these reasons.

• Active Salt Lemon (Tan Hiep Phat) remains the leading brand in sports drinks in 2010, followed by 7-Up Revive. However, 7-Up Revive continued to record higher off-trade value sales growth in 2010, thanks to successful advertising campaigns on TV, and via billboards, and point-of-sale posters.

• Sports and energy drinks has a good mix of multinational and local players, with shares skewed towards internationals. Foreign brands tend to perform best in energy drinks, while local players tend to be better placed in sports drinks. However, sports and energy drinks is at a nascent stage and there is much room for improvement. Thus, the competitive landscape might change rapidly in the forecast period.

• There was no significant new product development in 2010. As the category is immature, manufacturers tended to focus on advertising and promotions to raise consumer awareness. Consumer demand is not sufficiently sophisticated to drive new product trends.

PROSPECTS

• Sports and energy drinks are expected to experience opposite sales trends over the forecast period. Sports drinks is predicted to accelerate in terms of volume and value sales growth, thanks to the rising gym population. As Vietnam’s economy becomes more open, more people will have the opportunity to meet and work with foreigners and adopt elements of their lifestyles. As such, local consumers are likely to pay more attention to their appearance and the importance of a first impression at work and socially. Thus, many people, especially in urban areas, will use gym workouts and sport to maintain or improve their fitness levels.

• On the other hand, energy drinks is expected to witness a slowdown in total volume sales growth, compared to the review period. Unlike nascent sports drinks, energy drinks is starting to reach maturity in the major cities, especially Hanoi and Ho Chi Minh City. With the development of the soft drinks industry in Vietnam, consumers will have more and more choice, and energy drinks will face tougher competition in the medium-to-long term.

• The rising awareness of health and wellness issues, especially among higher-educated urban consumers, represents both a threat and an opportunity to sports and energy drinks. While consumers are expected to spend more time exercising and playing sports, they may also be drawn away from these products due to their high caffeine and sugar content. However, opportunities are likely to outweigh threats, as it will take time for the industry to develop substitutes. In the short term, dietary supplement drinks will remain the main alternative.

• The rising costs of transportation, electricity and water, as well as other raw materials, announced by the government at the beginning of 2010, will put pressure on manufacturers in terms of unit prices. Moreover, the inflation rate remains high rate despite the economic recession having largely been overcome. Thus, it is anticipated that unit prices will increase in current value terms over the forecast period. However, in constant value terms, unit prices are expected to decline as manufacturers enjoy larger economies of scale. Also, most manufacturers will try to keep prices as stable as possible in order to attract consumers.

CATEGORY DATA

For each category and subcategory you will receive the following data in Excel format:

From Passport

• Market sizes
• Company shares
• Brand shares
• Distribution
• Chilled v ambient juices
• Flavours
• Off-trade vs on-trade
• Package size
• Packaging type
• Per cent share of smoothies
• Pricing
• Products by ingredient
• Products by ingredient
• Sports vs other functional bottled water

Market size details:

• Retail volume
• Retail volume % growth
• Retail volume per capita
• Foodservice volume
• Foodservice volume % growth
• Foodservice volume per capita
• Total volume
• Total volume % growth
• Total volume per capita
• Retail value retail selling price % growth
• Retail value retail selling price local currency, USD, EUR, GBP, CHF, JPY
• Retail value retail selling price per capita local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value retail selling price % growth
• Foodservice value retail selling price local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value retail selling price per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price % growth
• Total value retail selling price local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price per capita local currency, USD, EUR, GBP, CHF, JPY
• Retail value retail selling price real (constant 2008) prices % growth
• Retail value retail selling price real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• Retail value retail selling price real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value retail selling price real (constant 2008) prices % growth
• Foodservice value retail selling price real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value retail selling price real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price real (constant 2008) prices % growth
• Total value retail selling price real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Retail value manufacturer selling price % growth
• Retail value manufacturer selling price local currency, USD, EUR, GBP, CHF, JPY
• Retail value manufacturer selling price per capita local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value manufacturer selling price % growth
• Foodservice value manufacturer selling price local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value manufacturer selling price per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price % growth
• Total value manufacturer selling price local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price per capita local currency, USD, EUR, GBP, CHF, JPY
• Retail value manufacturer selling price real (constant 2008) prices % growth
• Retail value manufacturer selling price real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• Retail value manufacturer selling price real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value manufacturer selling price real (constant 2008) prices % growth
• Foodservice value manufacturer selling price real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value manufacturer selling price real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price real (constant 2008) prices % growth
• Total value manufacturer selling price real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Retail value retail selling price excl powder % growth
• Retail value retail selling price excl powder local currency, USD, EUR, GBP, CHF, JPY
• Retail value retail selling price excl powder per capita local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value retail selling price excl powder % growth
• Foodservice value retail selling price excl powder local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value retail selling price excl powder per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price excl powder % growth
• Total value retail selling price excl powder local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price excl powder per capita local currency, USD, EUR, GBP, CHF, JPY
• Retail value manufacturer selling price excl powder % growth
• Retail value manufacturer selling price excl powder local currency, USD, EUR, GBP, CHF, JPY
• Retail value manufacturer selling price excl powder per capita local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value manufacturer selling price excl powder % growth
• Foodservice value manufacturer selling price excl powder local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value manufacturer selling price excl powder per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price excl powder % growth
• Total value manufacturer selling price excl powder local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price excl powder per capita local currency, USD, EUR, GBP, CHF, JPY
• Retail rtd volume
• Retail rtd volume % growth
• Retail rtd volume per capita
• Foodservice rtd volume
• Foodservice rtd volume % growth
• Foodservice rtd volume per capita
• Total rtd volume
• Total rtd volume % growth
• Total rtd volume per capita
• Fountain on-trade volume through c-store
• Fountain on-trade volume through c-store % growth
• Fountain on-trade volume through c-store per capita
• Fountain on-trade volume through foodservice
• Fountain on-trade volume through foodservice % growth
• Fountain on-trade volume through foodservice per capita
• Total fountain on-trade volume
• Total fountain on-trade volume % growth
• Total fountain on-trade volume per capita
• Foodservice value manufacturer selling price excl powder real (constant 2008) prices % growth
• Foodservice value manufacturer selling price excl powder real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value manufacturer selling price excl powder real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price excl powder real (constant 2008) prices % growth
• Total value retail selling price excl powder real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price excl powder real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price excl powder real (constant 2008) prices % growth
• Total value manufacturer selling price excl powder real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price excl powder real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Retail value retail selling price excl powder real (constant 2008) prices % growth
• Retail value retail selling price excl powder real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• Retail value retail selling price excl powder real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value retail selling price excl powder real (constant 2008) prices % growth
• Foodservice value retail selling price excl powder real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value retail selling price excl powder real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Retail value manufacturer selling price excl powder real (constant 2008) prices % growth
• Retail value manufacturer selling price excl powder real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• Retail value manufacturer selling price excl powder real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Retail value retail selling price nominal (current) prices % growth
• Retail value retail selling price nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• Retail value retail selling price nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value retail selling price nominal (current) prices % growth
• Foodservice value retail selling price nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value retail selling price nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price nominal (current) prices % growth
• Total value retail selling price nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Retail value manufacturer selling price nominal (current) prices % growth
• Retail value manufacturer selling price nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• Retail value manufacturer selling price nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value manufacturer selling price nominal (current) prices % growth
• Foodservice value manufacturer selling price nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value manufacturer selling price nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price nominal (current) prices % growth
• Total value manufacturer selling price nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Retail value retail selling price excl powder nominal (current) prices % growth
• Retail value retail selling price excl powder nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• Retail value retail selling price excl powder nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value retail selling price excl powder nominal (current) prices % growth
• Foodservice value retail selling price excl powder nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value retail selling price excl powder nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Retail value manufacturer selling price excl powder nominal (current) prices % growth
• Retail value manufacturer selling price excl powder nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• Retail value manufacturer selling price excl powder nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value manufacturer selling price excl powder nominal (current) prices % growth
• Foodservice value manufacturer selling price excl powder nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• Foodservice value manufacturer selling price excl powder nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price excl powder nominal (current) prices % growth
• Total value retail selling price excl powder nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price excl powder nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price excl powder nominal (current) prices % growth
• Total value manufacturer selling price excl powder nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price excl powder nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY

Global insight and local knowledge

With 40 years’ experience of developed and emerging markets, Euromonitor International’s research method is built on a unique combination of specialist industry knowledge and in-country research expertise.

This approach is what enables us to achieve our goal of building a market consensus view of size, shape and trends across the full distribution universe of each category. We factor in whichever channels are relevant, from large-scale grocery to direct sellers, from discount stores to local mom-and-pop outlets.

Industry specialists

Each industry we cover is managed by an Industry Manager and team of Industry Analysts who research and report on their specialist categories all year round.

Our collaborative approach to research means that these industry teams are in constant dialogue with industry players and opinion formers. The planning of our research programmes reflects latest market trends and industry events. In completing each update project, this provides invaluable input to the testing, review and finalisation of our data.

The specialist in-house teams bring together findings from all stages of the annual research process. They work closely with in-country analysts, assess and challenge data and exercise final editorial control over the publication of new data and analysis.

Country and regional analysts

Our in-country analyst network is managed by country and regional analysts in our offices around the world. Working closely with each in-country team, the regional research management team ensures that all country researchers are well schooled in best practices, from the information collected in store checks, to the dialogue we build in trade surveys. Our country analysts ensure that national reports explain the data trends and provide clear insights into the local market’s dynamics.

In-country research network

To deliver fresh insights every year in countries all around the world, we believe the strongest approach is to use analysts on the ground. They bring fluency in local language, physical proximity to the best sources, an ability to engage directly with local industry contacts, and an awareness of how the products and services we study are advertised, sold and consumed. These are essential parts of our ability to report incisively on these markets.

Our research methods

Each Euromonitor International industry report is based on a core set of research techniques:

Desk research

With industry events, corporate activity, trends and new product introductions tracked year round by our industry team, desk research provides a starting point for the in-country research programme. Our in-country researchers will access the following sources:

• National statistics offices governmental and official sources
• National and international trade press
• National and international trade associations
• Industry study groups and other semi-official sources
• Company financials and annual reports
• Broker reports
• Online databases
• The financial, business and mainstream press

Accessing sources is only the first step. The ability to interpret and reconcile often conflicting information across multiple sources is a key aspect of the added value we provide.

Store checks

Store checks are an integral part of our methods for product industries. Carried out on the ground across a relevant mix of channels, the information gained provides first-hand insights into the products we are researching, specifically:

• Place: We track products in all relevant channels, selective and mass, store and non-store
• Product: What are innovations in products, pack sizes and formats?
• Price: What are brand price variations across channels, how do private label’s prices compare to those of branded goods?
• Promotion: What are marketing and merchandising trends, offers, discounts and tie-ins?

Findings are cross-referenced with brand share data analysis. The results, combined with the findings of desk research, provide a strong basis for identifying key areas of questioning to take forward into our trade survey.

Trade survey

Interaction with global players at corporate HQ and regional levels is complemented by unique local data and insights from our in-country trade surveys around the world. Through the high profile of the Euromonitor International brand, we are able to talk directly to a wide range of sources and therefore inform our analysis with the knowledge and opinions of the leading operators in the market.

Trade surveys allow us to:

• Fill gaps in available published data per company
• Generate a consensus view of the size, structure and strategic direction of the category
• Access year-in-progress data where published sources are out of date
• Evaluate the experts’ views on current trends and market developments

In building our composite industry view, we engage with a variety of personnel in key players at all points of the supply chain: materials suppliers, manufacturers, distributors, retailers and service operators. We also interview desk research sources: industry associations; study groups; and third party observers from the trade and financial press.

Our objective is to engage in conversation with trade sources in which we exchange ideas and views on the industry, sharing our work-in-progress findings on supply/demand dynamics and potential. This dialogue enhances both parties’ understanding of the local market. The scope and reach of our trade survey also serves to eliminate bias (intentional and unintentional) from any single source.

Company analysis

At a global level, our company research combines our mix of industry interaction and use of secondary sources such as annual accounts, broker reports, financial press and databases. From a data perspective, the aim is to build “top-down” estimates of major players’ total global and regional sales.

At a country level, in line with local reporting requirements, we access annual accounts, national-specific company databases and local company websites. These are all invaluable sources as we build a view of each domestic player’s size and position within very specific categories of the industry.

Forecasts

Data projections and future performance analysis are key elements of Euromonitor International’s market intelligence. Working with historic trends of 15 years or more, a key aspect of our trade survey is to engage industry insider views of the next five years. Will volumes maintain their historic trend? Will price increases or falls of recent years continue, accelerate or slow down? Will increasing demand for one product cannibalise sales of another?

Forecasts represent many of the essential conclusions we have reached about the current state of the market, how it works and how it behaves under different macro and micro conditions. Our written analysis will state the assumptions and the trade opinion behind whether our predictions are optimistic or pessimistic, so that clients can use our statistical forecasts with confidence.

Data validation

All data is subjected to an exhaustive review process, at country, regional and global levels.

The interpretation and review of sources and data inputs forms a central part of the collaboration between industry teams and country researchers. Numbers are delivered to regional and global offices with an audit trail of sources and calculations to allow for a thorough evaluation of data sense and integrity.

Upon completion of the country review phase, data is then reviewed on a comparative basis at regional and then at a global level. Comparative checks are carried out on per capita consumption and spending levels, growth rates, patterns of category and subcategory breakdowns and distribution of sales by channel. Top-down estimates are reviewed against bottom-up regional and global market and company sales totals.

Where marked differences are seen between proximate country markets or ones at similar developmental levels, supplementary research is conducted in the relevant countries to confirm and/or amend those findings. This process ensures international comparability across the database, that consistent category and subcategory definitions have been used and that all data has been correctly tested. We make sure that possible discrepancies between different published sources have been reconciled and that our interpretation of opinion and expectation from each country’s trade sources has been applied to form a coherent international pattern.

Market analysis

Another integral part of all our research programmes is that all Euromonitor International data is accompanied by clear written analysis. From a research perspective, this explains and substantiates data findings. From a client perspective, this offers unique insights into local consumption trends, routes to market, brand preferences, channel dynamics and future trends.

Our country level analysis also provides invaluable input into the ability of our central industry specialist teams to marry local insights with strategic conclusions on the direction of the market regionally and globally.