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Top brands saturate beverage market

Update: March, 19/2009 - 00:00

Top brands saturate beverage market

(20-03-2009)

Workers inspect a bottling line at Thach Bich Mineral Water Plant in the central province of Quang Ngai. Investors are finding niche markets in a highly competitive industry by coming up with products that appeal to local tastes, such as bottled green tea. — VNA/VNS Photo

HCM CITY — The Ministry of Industry and Trade has said further investment in the beer and beverages industry should be avoided in the face of stiff competition from foreign and domestic beverage brands.

Business Monitor International, a global business consultancy company, said the country’s beer, alcohol and beverages industry had seen high growth and would continue to do so.

However, the ministry believes that the market is already highly competitive and any new players would face difficulty competing with the many beer and beverages companies that already exist.

Despite the economic slump, several beer and beverage brands have seen strong growth.

The Sai Gon Beer-Alcohol-Beverages Corporation (Sabeco), for example, has seen a growth of 38.3 per cent last year compared to 2007 and its counterpart in Ha Noi, 28.3 per cent.

Beer accounts for 97.9 per cent of alcoholic drinks, and its production is expected to increase by 50.7 per cent by 2013.

Many of the world’s big beer and alcoholic and beverages corporations over the past years have made investments in Viet Nam.

The Calsberg beer company invested in the Hue Beer Company and Dong Nam A beer joint venture.

Other players, Heineken, Tiger and San Miguel, also established breweries in Viet Nam, with a total capacity of more than 700 million litres a year.

Beverages such as soft drinks and bottled water are dominated by two giant firms, Pepsi and Coca Cola.

Domestic beverage companies, aware of the public’s taste for traditional tea, have invested in bottled green tea and energy drinks, gaining success in these sectors.

A representative of Maximart Co-op chain said sales turnover of bottled green tea rose an average of 30-40 per cent a year in the last two years, leading to more investment in this sector.

Tan Hiep Phat Corporation, the first business to produce bottled green tea in 2006, recently invested US$20 million in a bottled herbal tea factory.

Tran Uyen Phuong, Tan Hiep Phat Corp director, said her corporation had focused on diversifying products such as bottled green tea and energy drinks to differentiate itself from soft drinks made by Coca Cola or Pepsi.

With a market of more than 80 million people, Viet Nam is seeing beverage consumption grow sharply, largely due to economic growth, urbanisation, the rising flow of foreign tourists and foreign direct investment.

Ralf Matthaes, director general of market research company TNS Indochina, said despite facing an economic crisis in 2008, Vietnamese consumers did not reduce their spending on beverages.

Competition among beer and beverage companies remains heated, and firms must constantly diversify new products, improve quality and offer competitive prices to gain larger market share, industry officials have said. — VNS

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