Better For You Beverages in Vietnam

PROSPECTS

BFY beverages fail to gain traction with the majority of Vietnamese consumers, who prefer the taste of standard beverages and do not see significant benefits

Consumer awareness of and interest in BFY beverages remained low in Vietnam in 2019. One reason for the lack of interest on the part of the majority of Vietnamese consumers, even when they are aware of the BFY beverages on offer in the retailing channel, is that many people find BFY variants to have a less pleasant taste than standard beverages.

Reduced-sugar and reduced-caffeine cola carbonates attract the most consumers, but face increasing competition from healthier product types

Rising consumer health awareness has somewhat boosted consumers’ attention to BFY beverages, but due to a general lack of interest among consumers and limited investment from manufacturers, BFY beverages in Vietnam remained underdeveloped at the end of the review period. BFY reduced-sugar and reduced-caffeine cola carbonates were still the only categories to register significant value sales in 2019.

As manufacturers continue to develop BFY options, their biggest challenge is to ensure that the products taste as good as standard options do

Development of BFY beverages is mostly concentrated in big cities such as Ho Chi Minh City and Hanoi. Consumers that live and work in Vietnam’s urban areas usually have more disposable income with which to purchase health and wellness products, and they also have higher interest in such products than other consumers do.

COMPETITIVE LANDSCAPE

Coca-Cola maintains its lead in a highly consolidated BFY beverages landscape

Coca-Cola Beverages Vietnam, the leader in BFY beverages, saw another strong performance in 2019 as the company actively pursued wider distribution of its Coca-Cola brand in modern channels such as supermarkets, hypermarkets and foodservice operators such as restaurants. Its increased presence in foodservice outlets has in turn generated more interest in purchasing the brand at the retail level.

Most local players lack the industry expertise and financial resources to develop competitive BFY beverages

Local players record negligible presence with the BFY beverages landscape, largely due to a lack of industry expertise in manufacturing reduced-sugar and reduced-caffeine carbonates, the dominant product types in BFY beverages and also due to a lack of financial ability to incur the higher production costs. However, some larger domestic players such as Tan Hiep Phat Group are trying to establish a presence in reduced-sugar RTD tea.

Strong positions of Coca-Cola and Suntory PepsiCo also discourage local companies from entering the category

Over the forecast period, the competitive environment within BFY beverages is unlikely to change significantly; Coca-Cola, Suntory PepsiCo and Aje Group are expected to remain the clear leaders. While competition between Coca-Cola and Suntory PepsiCo in reduced-sugar carbonates will remain intense, their strong positions are likely to continue discouraging local companies from entering this category.

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