VietNamNet Bridge – Technology, transport, labor cost and distribution network are the four factors every investor needs to consider when attempting to join the Vietnamese bottled drink market.

Bottled drink market witnesses cutthroat rivalry of the big cheeses

In 2009, the Ministry of Health promulgated the strict regulations on food safety, which then forced small bottled drink producers to shrink back. However, the market has boomed again recently, when the state management agencies’ control seems to be loosened.

Meanwhile, a lot of well-known foreign names, including Japanese, have also penetrated the Vietnamese market. This means that the competition would be even fiercer in the future.

Tran Ngoc Binh, Director of the Hoang Tran Trade Company, one of the biggest bottled drink distributors in Vietnam, said if considering the sales of Hoang Tran, Vinh Hao is with 60,000 products, followed by Wami with 45,000 products sold a year. Meanwhile, Aquafina, which some market survey firms highlight as the market leader, ranks the fourth. Aquafina does not have big water jug products (19 liter).

Every manufacturer follows its own way in the plan to conquer the domestic market. Instead of scaling up production, La Vie has kicked off an in-depth investment plan. With the two factories located in Hung Yen in the north and Long An in the south, La Vie products can reach out to all the three main northern, central and southern markets. Therefore, it has decided to focus on upgrading technologies and improving the production lines to compete effectively with other brands.

Aquafina now has big advantages in the small size products, 350ml - 500ml bottles. Analysts believe that the thing that helps Aquafina succeed in the domestic market is the reasonable customer positioning. Aquafina has become a redoubtable rival of La Vie, and then Coca Cola with Dasani products..

The recent survey of EI shows that La Vie is still leading in terms of bottled drink water retail, but its market share has dropped to 27 percent.

Commenting about the capability of domestic manufacturers, the executive from Hoang Tran said the Vinh Hao’s products selling very well at Hoang Tran’s network are not traditional mineral water, but purified bottled water with Vihawa brand (19 liter). The sales of the products are four times higher than bottled mineral water of the same brand.

However, the noteworthy thing here is that Vihawa has just increased its presence in the market recently, though the brand has existed for a long time already.

As for Coca Cola, since it launched Dasani purified water into the market in late 2010, the giant seemingly has not shown all of its strength. Dasani brand ranks the second in the top 10 of bottled drink brands in the home market, the US, according to Beverage Marketing Corporation.

Dasani’s sales reached 834 million dollars, holding 10 percent of the market share. The first position belongs to Aquafina with the turnover of 936 million dollars, holding 11.3 percent. Meanwhile, in Vietnam, Dasani has not launched any considerable advertisement campaign since the event of helping bring clean water to the Mekong Delta.

Tran Xuan Hiep, Director of Satco, believes that with more and more bottled drink manufacturers joining the Vietnamese market, the competition among the manufacturers would be very stiff.

Of course, the manufacturers’ decisions on pricing policy and distribution channel would decide their success in the competition for market shares.

“Once they can find the answers to the two questions, it would be as easy as anything for big manufacturers to swallow smaller ones,” Hiep noted.

Compiled by C. V