Vietnam beverage market: domestic enterprises are overwhelmed by foreign ones

Over the last few years, Vietnam beverage industry is seen as a key industry making significant contribution to the country’s economy, meeting the demand of beer, alcohol and beverage in the market. Vietnam is also considered as “golden land” for beverage business and capture investors’ attention due to the dense population of about 89 million people, compound annual growth rate up to 8% and is forecast to be reach its highest level in Asean. The attraction of Vietnam beverage market leads to fierce competition and put domestic enterprises under pressure.

According to experts in food and beverage, on the one hand, Vietnam beverage sector saw bright outlook of high growth. Specifically, the annually double digit growth reached 12% in the period 2010-2015, and is forecast to remain more than 10% in 2017.On the other hand, more than 50% of market share in Vietnam beverage belonged to foreign enterprises.

Accounting for 40% shares with the value of USD 2 billion in Saigon alcohol-beer-beverage joint stock corporation(Sabeco) ThaiBev, Thai billionaire is unveiling his ambition in taking market shares from Vietnam beverage market. Besides, F&N Dairy Investments Pte Limied company of Thai richer is seizing 11,04 charter capital of Vinamilk and ranks at the second position in shareholders of Vinamilk. This shows the deep penetration of foreign corporation into Vietnam market and reveals the big gap in the competitive capacity of domestic enterprises with foreign ones. 

ThaiBev – An asset of a Thailand billionare in Vietnam

Domestic beverage enterprises are facing stiffer competition owing to the State‘s administrative policy. Moreover, beverage sector’s raw materials are dependent on importing from foreign countries though Vietnam is a large exporter of produce. Besides, domestic enterprises are incapable of developing their brands and launching their products to markets due to limited capital. Meanwhile, foreign investors grab the chance and consider beverage free marketing as a key solution to launch new products into market.

Vietnam beverage industry’s the potential of growth is obvious; however, the higher the profitability is, the fiercer the competitiveness of market share is. Therefore, domestic enterprises need to pay more attention to the stage of making brands for products. The improvement of design is more important than heavy investment in marketing activities. Moreover, domestic enterprises should stay connected one another and concentrate on management ability, technology adaptation with a view to catching up with foreign enterprises.