Consumers may be curbing their intake of carbonated drinks in many markets, but in Vietnam, soft drinks consumption looks set to break the 1 billion litres barrier in 2015, finds a new report by Canadean
The carbonates landscape in Vietnam has been expanding rapidly over the last few years, from 587 million litres in 2010 to 836 million litres in 2014, increasing at a CAGR of 9.2%. This growth is due to a rising population, increasing incomes and the development of an important consumer group - the young urban professional. Erica Shaw, analyst at Canadean, says: "The pace of urbanisation is high and over half the population in Vietnam is under 35 years old, which gives another huge demographic push to the carbonates category."
Favourable trading conditions for international investment
Trading conditions are favourable for international investment in Vietnam, with the government recently exempting carbonates from a Special Consumption Tax, which has been applied and increased on other goods, such as cigarettes, beer and spirits. Shaw explains: "The government's decision against adding a Special Consumption Tax (excise tax) onto carbonated soft drinks gives an extra 'green light' for companies wishing to invest in carbonates in Vietnam."
Enticing new products appeal to young urban consumers
2014 saw the launch of several enticing new products aimed at young urban consumers, including Tropicana Frutz from Suntory PepsiCo Vietnam Beverage. The drink, available in apple and trendy "cocktail" flavours, and packed in a jazzy and easily transportable 33cl PET bottle, taps into the street style culture in Vietnam. Coca-Cola Sabco is also successful in combining international campaigns with local needs. For example its 'Happiness Truck' was featured in promotions during T?t, the Vietnamese New Year. "During this holiday, gifts of food and drinks are traditionally exchanged, making it the perfect occasion for promoting soft drinks," says Shaw.
Carbonates consumption driven by blossoming fast food chains
Even though the Vietnamese market is responding to health awareness, with low calorie options such as Coca-Cola Light proving to be popular, it is regular carbonates which are driving growth at the moment. Furthermore, fast food chains are blossoming in cities, where eating out is increasing along with the improving economy. McDonald's has just entered the market place which will also help carbonates to expand further. "The global giants have an overall dominant influence and set the trends, which the rest of the market has to follow," adds Shaw.
