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 liter barrier in 2015, finds a Canadean report.
The carbonates landscape in Vietnam has been expanding rapidly over the last few years, from 587 million liters in 2010 to 836 million liters in 2014, increasing at a compound annual growth rate 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.
“The pace of urbanization is high and over half the population in Vietnam is under 35 years old, which gives another huge demographic push to the carbonates category,” says analyst Erica Shaw.
Favoring foreign investment
Trading conditions are favorable 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.
“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,” says Shaw.
In 2014, new products were aimed at young urban consumers, including Tropicana Frutz from Suntory PepsiCo Vietnam Beverage.
The drink, available in apple and trendy ‘cocktail’ flavors, and packed in a jazzy and easily transportable 33cl PET bottle, taps into the street style culture in Vietnam.
Coca-Cola Sabco’s ‘Happiness Truck’ was featured in promotions during 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.
Rising carbonates consumption
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.