Hot Drinks in Vietnam

Improved income, health consciousness and desire for convenience all contribute to continued strong growth for hot drinks in Vietnam

All categories of hot drinks saw solid to strong value and volume growth in 2019, as Vietnam’s strong economic growth and consumers’ higher disposable income boosted demand for even the more expensive coffee and tea and manufacturers upped the ante by focusing on widening the offer and upgrading the packaging. The rising number of bubble tea shops and demand for milk tea strongly contributed to growth of all types of tea – black, green and fruit/herbal.

Bubble tea popularity and changing demand from malt-based hot drinks to RTD versions are two main trends observed in 2019

Aside from increased demand for hot drinks products perceived as healthy, accompanied by rising interest in, if not yet significantly high sales of organic coffee, the most significant trends observed within hot drinks in 2019 were continuing trends in the arena of tea and malt-based hot drinks. In tea, there has been a highly positive trend related to the increasing popularity of bubble tea, served in an ever-increasing number of bubble tea shops where younger generations like to socialise while enjoying such bubble tea drinks as milk tea.

Two players switch ranks in hot drinks in an otherwise stable competitive landscape

The competitive landscape for hot drinks in Vietnam remained relatively stable in 2019, as the two top players – the multinational Nestlé Vietnam and domestic player Vinacafe Bien Hoa – maintained their leading positions in instant coffee and “other” hot drinks. However, over the year Vinatea - Vietnam National Tea Corp surpassed Trung Nguyen to take the third position.

Hot drinks continues to see few product launches, as players focus more on upgrading packaging, marketing and widening distribution

For the second year in a row, few new product launches were noted within hot drinks in 2019. Instead, players focused on marketing or upgrading the packaging on their existing products.

Strong value growth is expected, especially for green tea and “other” plant-based hot drinks targeting health-conscious consumers

Over the forecast period, hot drinks is expected to see strong value growth across the board, with tea – primarily green tea and fruit/herbal tea – and “other” plant-based hot drinks seeing particularly high growth in line with increased demand for products considered healthier, and with instant coffee benefiting from the convenience trend. On the other hand, demand for convenience is expected to continue benefiting RTD versions of malt-based hot drinks (which Euromonitor International covers under dairy in packaged food) at the expense of powdered malt-based hot drinks.

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