Market trend: Juice in Vietnam

Overview

According to BMI, Vietnam is one of the most attractive global food and beverage markets, ranking 10th in Asia in 2019. The analysis report of Phu Hung Securities Joint Stock Company also predicts that non-alcoholic beverage revenues in Vietnam could grow at an average rate of 10.5% by 2024. In particular, carbonated beverages promise strong sales growth, averaging 11.9% per year in the medium term.

The food and beverage market, especially non-alcoholic beverages, has plenty of room and motivation for development. In recent years, Vietnamese people have become more aware of health products, due to a significant increase in diabetes, high blood pressure and cancer. Vietnamese people are now moving towards healthier, more nutritious and less sugary drinks. Consumers are willing to pay more for healthier products, spend less on carbonated soft drinks.

Market size

According to estimates of the Ministry of Industry and Trade, the annual consumption of Vietnam’s F&B industry always accounts for about 15% of GDP, the monthly spending structure of consumers for this item accounts for about 35% . Along with that, Vietnam has signed to participate in a series of trade agreements such as the Vietnam – European Union Free Trade Agreement (EVFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership(CPTPP) opens up many opportunities for F&B businesses to develop in the coming time. The growth in this industry depends mainly on the increasing consumer interest in healthy beverages. This is good news for fruit juice manufacturers.

The best healthy drinks to match the new drink trend are those of natural, organic origin. Fruit juice, especially packaged fruit juice, is becoming a popular choice among Vietnamese consumers.According to Euromonitor, Juice is expected to record 7% CAGR in off-trade value and 5% in off-trade volume over the forecast period, to reach VND18 trillion and 655 million liters in 2026.

Consumption structure of beverage industry  [H3]  has changed as the market share of bottled water, tea and fruit juice gradually increases over the years. In 2021, the market share of tea and fruit juices, bottled water will account for 65.39% of the consumption structure of the beverage industry due to changes in Vietnamese people’s consumption patterns towards low-sugar, healthy products. strong; followed by carbonated soft drinks 18.73% and energy drinks 11.20%; the remaining types accounted for 4.68%.


Growth driver of beverage industry

Global financial services provider Fitch Solutions reported Việt Nam’s spending on essential goods, such as food and non-alcoholic beverages, housing and utilities, is estimated to grow between 8 per cent and 10 per cent year-on-year in 2022 and 2023 respectively, driven by rising spending post-pandemic.

Domestic demand for high-end consumer goods is also increasing. With roughly 100 million people, Việt Nam is the world’s 17th largest country in terms of population. The country is achieving the highest GDP growth rate in ASEAN, with the compound annual growth rate for the 2018-20 period reaching 6.9 per cent.

According to Fitch Solutions, Việt Nam’s disposable income per household will reach US$6,848 by 2024, with a compound growth rate of 8 per cent in the 2020-24 period.

A rapidly rising middle-income class and increasing disposable income will boost the new trend of the beverage industry which will be products of organic origin and environmentally friendly. When nutritional products such as juices, smoothies, milk, etc. become more popular, the demand for healthy products will also increase, leading to development opportunities for product lines.

In particular, Vietnamese people are increasingly concerned about their health during the time of the Corona pandemic. The growing interest in the health of Vietnamese consumers can also be confirmed through Google Trends. Search volume for health-related keywords like nutritional supplements, vitamin C, organic, juice, fitness, and healthy has increased dramatically over the past five years.


Growth driver of beverage industry

Global financial services provider Fitch Solutions reported Việt Nam’s spending on essential goods, such as food and non-alcoholic beverages, housing and utilities, is estimated to grow between 8 per cent and 10 per cent year-on-year in 2022 and 2023 respectively, driven by rising spending post-pandemic.

Domestic demand for high-end consumer goods is also increasing. With roughly 100 million people, Việt Nam is the world’s 17th largest country in terms of population. The country is achieving the highest GDP growth rate in ASEAN, with the compound annual growth rate for the 2018-20 period reaching 6.9 per cent.

According to Fitch Solutions, Việt Nam’s disposable income per household will reach US$6,848 by 2024, with a compound growth rate of 8 per cent in the 2020-24 period.

A rapidly rising middle-income class and increasing disposable income will boost the new trend of the beverage industry which will be products of organic origin and environmentally friendly. When nutritional products such as juices, smoothies, milk, etc. become more popular, the demand for healthy products will also increase, leading to development opportunities for product lines.

In particular, Vietnamese people are increasingly concerned about their health during the time of the Corona pandemic. The growing interest in the health of Vietnamese consumers can also be confirmed through Google Trends. Search volume for health-related keywords like nutritional supplements, vitamin C, organic, juice, fitness, and healthy has increased dramatically over the past five years.


Trending chart of users searching for keywords about juice from 2016-2021 [H1] 

Trending chart of users searching for keywords about “Health” from 2017-2021[H1] 


Source: Google Trends

Main Player

Currently, according to the Vietnam Beer Alcohol – Beverage Association, there are about 1800 beverage production establishments . Coca Cola and Pepsi hold the position of two soft drink brands familiar to Vietnamese people when entering the market since the early 90s. In the country, Tan Hiep Phat is the most significant counterweight of these two names. Red Bull, a Thai enterprise, only participated in energy drinks but also earned trillions of dong. Masan, a domestic enterprise, entered the market later but soon entered the top group of the industry.

The trend of health drinks, functional drinks is gradually taking the throne in the world. With this potential, the beverage giants have quickly invested.

For example, in early November 2021, Coca-Cola spent 5.6 billion USD to acquire the entire business segment of BodyArmor. This is a company that makes sports drinks from coconut water. According to statistics, BodyArmor’s sales reached 1.4 billion USD this year, market share increased 6 times and surpassed Coca Cola’s 30-year-old Powerade.

Pepsi also bought Rockstar Energy for $4 billion in 2020, or Dr.Pepper bought a low-sugar fruit drink brand Bai for $1.7 billion.

Signs of the potential of this market come not only from acquisitions, but also from deals selling off opposing products.

Such was the case with Pepsi. In August 2021, Pepsi announced to sell Tropicana, Naked and a number of other juice brands for $3.3 billion, the same amount Pepsi bought Tropicana in 1998. According to a Pepsi representative, this deal will help them focus on developing zero-calorie beverage products.

The moves of giants like Coca Cola or Pepsi predict that the healthy beverage market will be hotter than ever in the near future. In Vietnam, this also promises to be a very potential market.

Recently, Vietnam Report has announced the Top 10 prestigious companies in the non-alcoholic beverage industry in 2021. The ranking is built based on scientific and objective principles with 3 main criteria: Financial capacity; Media reputation; Survey of research subjects and stakeholders: consumers, experts… was conducted in August and September 2021.

Company Shares of Juice

Vietnam’s beverage market has grown rapidly in recent years with a sharp increase in consumption trends in the beverage group from natural fruits.

According to the report of Euromonitor , , the market share of Juice  is currently dominated by PepsiCo Vietnam over 50% of the market share, following is Cocacola about 8.2%, Interfood shareholding is 4.3 % and 3.6% of Dona Newtower.

Popular Juice in Vietnam

One Litter Juice Box

The fruit juice line with a large capacity of 1 liter is suitable for all objects in households, appearing in most supermarkets, mini supermarkets, and convenience stores, so customers can easily access their products.  The most popular juice brands representing this type of juice in Vietnam are Vfresh fruit juice, Fruit lover of Vinamilk, Juice of Le Fruit and Malee.

Plastic Bottled Juice

The line of bottled fruit juices is very popular in Vietnam. Small and beautiful 350ml bottles are convenient for individuals to bring to school, play or work.

Product prices range from 10,000 – 30,000 VND, suitable for the pocket of many people, especially students.

Popular fruit drink product lines in Vietnam can be mentioned as Nutri boots of Coca-Cola, Pepsico orange/strawberry twister drink, TH true juice, etc. ..

Juice bag

The product line of fruit juice bags with screw caps has the coverage of imported brands from Korea and Thailand. This product line is mainly used for children with fresh color designs and vivid cartoon characters to attract more children. The ingredients of these fruit juices are usually organic fruits rich in fiber, according to the formula suitable for children’s age group, not only a refreshing drink but also a good nutritional drink for the health and well-being of children. development for young children. The average price of this product is relatively high, from 15,000 – 60,000 VND / 1 bag.

Glass Bottled Juice

This is a form of fruit juice that is distributed in retailers in big cities and is the main e-commerce sales channel. The line of Vietnamese glass bottle juice drinks can include Le Fruit and Vinut, in addition to the presence of some foreign brands such as Australia’s Bundaberg Fruit Juice, Woongjin’s Juice Korea is also quite popular with Vietnamese consumers.

Distribution channel

According to Nielsen statistics, Vietnam currently has about 1.4 million grocery stores and more than 9,000 traditional markets, accounting for 75% of the market share. These grocery stores and traditional markets are meeting 85% of people’s consumption needs, according to Kantar WorldPanel Vietnam. Therefore, retail businesses have had a rapid development step, improving competitive capacity in the market. Many businesses have established a wide distribution and retail system, meeting all consumer needs.

Convenience, creeping into every corner of residential areas, especially in rural areas is the biggest advantage of traditional grocery stores in reaching consumers. However, the outdated business model is the biggest drawback of this huge chain of stores.

Meanwhile, the inevitable development trend of the market is online management, e-commerce, and non-cash payment. At that turning point, a “miracle” appeared, turning traditional grocery stores into “tech grocers”.

The trend of shopping channel, the store on General Trade channel was forced to close for a few months, leading to an increase in shopping demand on Modern Trade channel.

For nutritional drinks including juices, small supermarkets, mother and baby store chains of Modern Trade and Online channels  gain benefit:

• Minimarket (Small Supermarket) reached 69%

• MT Baby Product Specialty (Mother and baby store chain) reached 79%

• Online (Online shopping) reached 51%

Source: Kantar World Panel

Policy

– Imported fruit juice products need to make self-declaration according to Decree 15/2018/ND-CP dated 02/02/2018. Application for registration of the product self-declaration and Procedures for registration of the product self-declaration shall be specified at article 5 at Decree no.15/2018/NĐ-CP

– Imported fruit juice products need to perform specialized inspection on food safety by the Ministry of Industry and Trade according to Decision 1182/QD-BCT dated April 6, 2021.Procedure of specialized inspection on food safety shall be specified at Articles 18 and 19 of Decree No. 15/2018/ND-CP.

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