Beverage Industry Growth
Vietnam’s beverage market continues to attract investors as its growth potential is estimated to be three-fold higher than other Southeast Asian countries. With a steadily increasing GDP and booming foreign direct investment, it’s predicted to remain a stable prospect for beverage manufacturers.
Vietnamese-based Kido Group announced plans in 2018 to expand into the beverage industry with a focus on teas and milk products. International organizations such as Coca-Cola have also increased investment in Vietnam, including an initial launch of Coca-Cola Blak, a cola and coffee fusion drink marketed as a pick-me-up beverage. With a rise in disposable income, coffee continues to be a popular option among Vietnamese consumers who are attracted to Western convenience chain stores including Starbucks.
The influence of Western tastes and preferences has created a demand for dairy products in Vietnam. Although dairy products are not historically common in the Vietnamese diet, milk has become hugely popular. Accounting for about a third of children’s home drink consumption and over a tenth of women’s drink consumption, milk is becoming a staple product in many homes.
Companies like Vinamilk, the largest Vietnamese dairy company, have capitalized on this trend earning a huge USD 1.7 billion in sales during the first 9 months of 2017 alone. In April 2019 Coca-Cola Vietnam Beverages Ltd launched three new Nutriboost UHT milk products to tap into the growing dairy market. The milk products are aimed at children, but also at adults boasting health and beauty benefits.
Beer has traditionally been one of Vietnam’s favorite drinks. In 2016 beer accounted for 95% of Vietnam’s total alcoholic beverage consumption. While it remains a popular beverage, premium and craft beers are growing in importance. With different flavor profiles, the craft beer segment accounts for only 0.02% of the total market, but it grew by 40% in 2016 and has experienced continued growth since.
Micro-brewers and local brewing have become popular, and have been incorporated into the social fabric of cities and urban hubs. Although there is scope for small, local manufacturers, large foreign organizations are also taking advantage of the popularity of beer among the Vietnamese. Eager to break into the Southeast Asian market, Dutch brand Amstel launched in Vietnam in October 2018, its first destination in the region.