54bf1207b86eaVSC BeverageSupplyChain 2015
54bf1207b86eaVSC BeverageSupplyChain 2015
54bf1207b86eaVSC BeverageSupplyChain 2015
NETWORK
www.vietnamsupplychain.com
LEARN. SHARE. NETWORK
BEVERAGE
SUPPLY
CHAIN
I. OVERVIEW
2. Soft drink
a. Volume/ Value and growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
b. Soft drink categories breakdown. . . . . . . . . . . . . . . . . . 17
c. Ready-to-drink (RTD) tea. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3. Hot drink
a. Volume/ Value and growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
b. Hot drink categories breakdown. . . . . . . . . . . . . . . . . . . 20
c. Hot drink market shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
V. CONCLUSION
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I. OVERVIEW
The beverage industry in Vietnam has existed for a long time and has been expanding more quickly over
the past decades. The development of the industry was supported by foreign investment and the catch-up
development of the domestic producers recently. In 1994, Coca-Cola constructed their first plant and has
achieved high growth since then. In 1991 Pepsi Co also entered in Vietnams market under a joint venture
and continues to have strong presence in Vietnam nowadays. In a similar but later move, a giant of the
world beverage sector, Nestle, plans to increase its coffee sourcing from local farmers in Vietnam and has
committed to a new coffee plant in the country. The USD 270 million plant will be constructed in the south-east
province of Dong Nai and will produce Nescafe-branded products for the domestic and international markets
from 2013. Products of the beverage sector are diversified with high quality meet consumers demand. The
industry has contributed significantly to the economy. As of 2013, Vietnams food and beverage (F&B)
consumption was USD 42.8 billion, accounted for 40.5% of total consumption and posted a remarkable
compounded annual growth rate (CAGR) of 11% over the period 2010-2013.
Opportunities
Accession to the WTO, in January 2007, will
continue to benefit Vietnamese exporters, with
the gradual removal of market barriers and trade
restrictions set to increase competition.
Vietnams large domestic market, growing export
opportunities and low labor costs, as well as
the prospect of acquiring newly privatized drink
companies, offer further investment opportunities.
A growing tourism sector is fuelling interest in
convenience categories, in addition to sub-sectors
such as soft and alcoholic drinks.
In line with consumers rising disposable incomes,
there are opportunities for premium-branded
products in the soft and alcoholic drinks subsectors.
The global trend towards health consciousness
provides an opportunity for drinks manufacturers to
diversify into perceived healthier options.
Threats
Vietnams WTO membership may result in smaller
companies unable to cope with the increased
competition being forced out of business.
Elevated raw-material costs threaten profitability in
a competitive market in which higher prices cannot
easily be passed on to consumers.
Rising unemployment levels are taking their toll on
consumer confidence.
In 2013, retail sales of the beverage sector in Vietnam reached USD 8 billion, a 7.6% rise compared with
2012. Alcoholic drinks were the largest category with 70% contribution to total beverage market value.
It modestly grew 6.3% up to USD 5.6 billion, the lowest growth rate amongst other beverage categories.
Soft drinks posted the highest growth of 12.4% to record USD 1.7 billion in sales value, while hot drinks
was the smallest segment with USD 0.7 billion revenue in 2013.
2013 Sales
2013 growth
Beverage
categories
USD8 bn
7.6%
Alcoholic
USD5.6 bn
6.3%
Sabeco, Habeco
Soft drinks
USD1.7 bn
12.4%
Hot drinks
USD0.7 bn
6.9%
Key players
Wine is expected to grow at around 4 percent per annum for the period 2011 2015. White
wine is forecast to grow at around 6 percent per annum for the same period and red wine at
3 percent.
Functions
RETAILERS
Wet Market
retailers
Hospitality, Supermarkets,
Small Shops
Supermarkets
Outside Tanzanla
International
Cold-chain
Transport
Distributors
(Importers)
Gap/sps
Certifcation
Services
Wholesalers
(Importers)
WHOLESALE
Wet Market
Intermediarles
BROKER
Distributors
INPUT SUPPLY
PRIVATE IMPORTERS,
DISTRIBUTORS AND AGENTS
JV IMPORTERS
AND AGENTS
Exporters
Intermediary
Co-op Association
Technical
Assistance
Distributors
Stockists
Vietnam possesses a dense retail network, widely spread throughout the country, including 424 supermarkets,
23 hypermarkets, 365 mini-marts and almost 779,000 of traditional markets and small private shops. While
supermarkets and hypermarkets account for the majority, the convenience store model is still in its infancy.
Grocery outlets are dominant with more than 636,000 units. The number of retail outlets is reported to have
increased every year at a rate of 1.2% during the period of 2009 through 2013. Also, existing prominent retailers
and wholesalers such as Saigon Coop, Big C, and Metro Cash & Carry have committed themselves to further
expansion not only in big cities but also in many provinces. The continuous growth and expansion of mass retail
outlets strongly encourages consumer purchasing and increases consumption value
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STATE-OWNED IMPORTERS,
DISTRIBUTORS AND AGENTS
Financial
Services
Brokers
Intermediaries
PRODUCER
Support Markets
DEPARTMENT
STORES
SUPERMARKETS
WINE
SHOPS
OTHER HOTELS
RESTAURANTS
& BARS
CONSUMERS
Vietnam allows foreign companies to import food and beverage products and distribute them through
both wholesale and retail channels. However, companies need to be registered in Vietnam and have an
investment license.
Unless a company has an investment license for distribution and invoicing, foreign companies must work
with an authorized agent or distributor in order to sell their products in Vietnam.
Agent: An agent will sell products for a commission. A typical agent will also provide market research,
marketing and promotion and after sales service to consumers.
Distributors: Distributors will purchase goods from foreign companies for resale.
Distributors can also sometimes perform the functions of an agent.
7
609,359
619,674
631,208
624,274
636,158
500,000
400,000
300,000
200,000
133,835
100,000
141,475
138,271
2009
2010
2011
grocery outlets
142,110
2012
143,613
2013
Non-grocery outlets
17,4%
82,6%
Alcoholic
drinks
Off-trade
40,4%
59,6%
Soft
drinks
58,4%
41,6%
Hot
drinks
Imported products
Imported products are subject to Import Tax, Special Consumption Tax (SCT) and
VAT as follows:
Import Tax = Import tax rate x Import price (*)
Special Consumption Tax (SCT) = SCT rate x (Import price (*) + Import tax)
VAT = VAT rate x (Import price (*) + Import tax + SCT)
(*) Including package value
The majority of alcoholic drinks were distributed through on-trade channels due to rising common
perception of drinking to socialize. Soft drinks followed the same pattern but at a less steep ratio of
60:40 relative to the ratio of 80:20 of the alcoholic drinks due to its convenience and high frequency of
use. In contrast, hot drinks were mainly consumed through off-trade channels as Vietnamese consumers
consider hot drinks a daily necessity and usually are consumed at home. In general, for each of beverage
category, there was 65% of off-trade sales value gone through the traditional channels with almost
779,000 of traditional markets and private shops.
On-trade
On-trade
Off-trade
560,000 caf /
bars, restaurants
and food outlets
12,500 hotels
Modern trade
424 supermarkets
23 hypermarkets
365 minimarts &
convenient stores
Traditional trade
778,959 traditional
markets & private
shops
Beer
Soft drinks(carbonate)
Import Tax
VAT
45%
50%
10%
Current
50-55%
35%
20 - 40%
Current
25%
35%
50%
0%
65%
65%
10%
Current
10%
10%
10%
As increasing Vietnameses exposure to drinking cultures around the world couples with their popular
perception of drinking to socialize, Vietnam alcoholic drinks consumption continues growing y-o-y and
has gained the biggest retail sales among other beverage categories. Further, rising numbers of tourists
and expatriates living in big cities also incentivize alcohol-serving retailers to expand, which in turn
stimulates local consumption as rising adoption of western lifestyle becomes more prevalent.
a. Volume/ Value and growth:
In 2013, Vietnamese people drank a remarkable 3.15 billion liters of alcohol, equivalent to VND
119.5 trillion (USD 5.6 billion), representing double-digit CAGR of 10.1% and 10.6% during 2010 to
2013. Despite its slowing growth since 2012 because of reaching maturity, alcoholic drinks remains one
of the potentially lucrative markets in Vietnam. It is expected to reach USD 6.3 billion in 2015 by
Euromonitor International.
4
3
2
13.8%
2.36
12.6%
2.66
2.92
9.9%
1
2010
2011
2012
3.15
7.9%
2013
3.38
3.59
7.0%
6.3%
2014F
2015F
15%
10%
5%
0%
Growth (%)
15.9%
88.5
18.4%
104.8
50
0
112.5
7.3%
2010
2011
2012
119.5
6.3%
2013
126.3
133.1
20%
15%
5.7%
5.4%
2014F
2015F
10%
5%
0%
Growth (%)
11
35
1.1%
5.7 4.7
4.8% 4.0%
Beer
4
3
2
Spirits
109.1
91.3%
2010
64
2012
100
16.2%
80.1
19.6%
95.8
50
0
102.8
7.3%
2010
2011
2012
Volume (bn liters)
37
China
29
27
Vietnam
Thailand
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2011
7.9%
2013
150
c. Beer:
While Vietnam was leading in the SEA region with 29 liters of beer consumption per capita in 2012, the
country captured the 4th position for the entire Asia region, only after Japan (64 liters), South Korea (45
liters) and China (37 liters). According to Vietnam Breweries Associations (VBA), beer consumption per
capita rose approximately 10% up to 32 liters in 2013. As such, Vietnam is considered one of the beer
loving countries and is among the most attractive destinations for international breweries.
South Korea
2.9
9.9%
3.1
3.3
3.5
7.1%
6.3%
2014F
2015F
15%
10%
5%
0%
Growth (%)
Japan
2.3
12.7%
2.6
45
13.9%
Wine
3,079
97.7%
The Vietnam beer market had a CAGR of over 10% in volume and value during the period from 2010 to
2013. However, as the market becomes saturated, growth cannot be as fast as it was prior to 2011. Beer
is forecasted to grow at a slower pace with an average 5.3% per annum and the sales will be USD 5.7
billion by 2015.
109.1
6.1%
2013
115.1
121.1
20%
15%
5.5%
5.2%
2014F
2015F
10%
5%
0%
Growth (%)
Lager is the main type of beer in Vietnam since Vietnamese consumers are already familiar with the taste
of lager and are reticent to try new tastes. Thus, other types of beer such as dark beer, stout and lowalcohols have only a limited presence in the market. Standard lager holds the lions share its biggest
shares of 67% of total lager due to still low disposal-income per capita. Also, there was a large gap of at
least 43% higher in unit price range of each segment including premium, standard and economy.
13
Bia Hoi
7.8%
Hanoi
Halida
35% total consumption
18.2%
Sabeco
Vietnam Breweries
Habeco
Hue Breweries
Others
Festival
Larue
Saigon
Heineken
Tiger
San Miguel
Heineken
Saigon
Saigon
333
Tiger
29.7%
7.7%
tiger
47.5%
17.3%
Heineken
Huda
6% total consumption
9.2%
75%
Total
consumption
(excluding
Bia Hoi)
24%
15.8%
8.4% 14.4%
Sabeco continued to lead the beer market with 47.5% value share in 2013. Its prominent brands such as
Saigon Export, 333export and Saigon Lager accounted for 46.8% market shares by brands. Vietnam
Brewery and Habeco hold the second and third positions with market shares of 18.2% and 17.3%
respectively. While Hanoi beer brand of Habeco took 15.8% of brands share, Heineken and Tiger of
Vietnam Brewery occupied 11.5% of the pie. The top three players Sabeco, Vietnam Brewery and Habeco,
together, hold 83% of value sales of beer in 2013.
Heineken
Sapporo
Tiger
333
Larue
larue
BGI
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2. Soft drink
18.8%
17.5%
17.1%
15.9%
14.6%
13.4%
2
1
0
20%
15%
1.5
2010
2.1
1.8
2011
2012
2.4
2013
2.7
2014F
3.1
2015F
5%
0%
Growth (%)
30
In 2013, PepsiCo was leading the local soft drinks with 25.5% market share, closely followed by Tan Hiep
Phat (THP) with that of 22.7%. PepsiCo is prominent among carbonates with brands such as Pepsi, 7-up
and Mountain Dew, while THP was the pioneer of RTD tea with Zero Degree and Dr. Thanh brands which
led to a booming demand for this herbal product during 2009 to 2010. The company highly dominated
the RTD tea market itself with 41% market shares. Its strong competitor is Universal Robina Corporation
(URC), with C2 brand which is also well-recognized by its taste and handy bottle size.
24.7%
22.6%
25.6
20
36.2
28.5
11.6%
40.3
44.6
32.2
12.9%
12.4%
11.4%
10.6%
25%
10%
0%
2012
Value (VND tn)
2013
2014F
13.3%
CocaCola
22.7%
Vinamilk
Others
2.1 1
6% 3%
5.7
16%
6.0
16%
RTD tea
Carbonates
21.0
58%
Bottled water
Fruit/Vegetable juice
Sport/energy drinks
Others
Growth (%)
2015F
10.5%
15%
5%
2011
PepsiCo
20%
10
2010
25.5%
3.4%
10%
40
17
30
25
39.8%
15
23.4
21.0
20
18.7
16.4
13.8
14.1%
18.5%
10
25.7
12.2%
11.4%
9.8%
5
0
2010
2011
2012
Value (VND tn)
2013
2014F
2015F
50%
40%
150
20%
100
10%
50
0%
20.8%
9.1%
46.4%
19.6%
Zero degree green tea (THP)
URC Vietnam
Interfood
Wonderfarm (Interfood)
Tribeco
Tribeco (Tribeco)
Other
Other
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109.1
7.5%
7.4%
2011
2012
7.3%
2013
134.7
7.8%
7.6%
7.2%
7.2%
2014F
2015F
7.4%
7.2%
7.0%
Growth (%)
Hot coffee and tea are long-standing traditional drinks of Vietnamese people. These require time to serve by
boiling ground coffee or tea leaves with water in a coffee filter or teapot. Thus, development of instant products
offers a perfect solution not only to maintain the traditional drinking habit but also ensure convenience and
timesaving for busy lifestyles. A variety of formulas were successfully introduced with 3-in-1 and 2-in-1 instant
format for both coffee and tea. As such, the growth of hot drinks is largely driven by instant products. Although the
growth rate was not as high as soft drinks, hot drinks recorded revenue of VND 14.1 trillion (USD 667.5 million),
rose 6.9%, and consumption volume of 117.1 thousand tons, grew 7.3%.
12%
20
2010
101.6
125.6
10.2%
21.1%
7.6%
117.1
9.4%
5%
41%
94.5
Growth (%)
RTD tea enjoyed a rapid increase in 2009 to 2010 and then slowed down, yet still maintained two-digit
growth. In 2013, RTD tea reported VND 21 trillion (USD 994 million) value of sales, an increase of 12.2%,
and 1 billion liters volume of sales, rose 13.3% compared to 2012. It represented a robust CAGR of 15.9%
in volume and 14.9% in value over the period of 2010 to 2013.
10.8%
30%
9.2%
6.1%
3. Hot drink:
15
10
10.2%
11.5
12.3
7.1%
13.1
7.1%
14.1
6.9%
15.0
16.0
8%
6.7%
6.4%
5
0
10%
6%
4%
2%
2010
2011
2012
Value (VND tn)
2013
2014F
2015F
0%
Growth (%)
19
1.5
11.0%
8.0
60.8%
3.7
28.2%
In 2013, Vietnam National Tea (Vinatea) continued to lead the local tea market, with 32% of the sales
value, followed by Unilever Vietnam with that of 15.5%. Vinatea is long-established with its industry
experience and technology. Between 2010 and 2013, the tea category saw robust branding strategies
come to the fore with international companies. This has led to the rising market share of Unilever Vietnam with well-recognized Lipton brand including Yellow Label and Clear Green.
Coffee
Tea
Others
Year 2013 (VND tn)
Soft drinks categories value breakdown
Source: Euromonitor International
5.3%
11%
52.5%
18.1%
10
8
6
12.1%
6.3
6.9
8.5%
7.4
8.2%
8.0
7.7%
8.6
7.3%
9.2
15%
15.5%
32.6%
6.8%
10%
5%
2
0
32%
33%
Nestle Vietnam
Vinatea
Unilever Vietnam
Trung Nguyen
Others
2011
2012
Value (VND tn)
2013
2014F
Growth (%)
2015F
0%
Other
Hot coffee market shares
Source: Euromonitor International
21
23
Ware housing
& distribution
Retail &
Point of Sale
Changes to
manufacturing
footprints
Drive to reduce
out-bound costs
Increasingly
complex
channel
management
Distribution
optimisation &
closer relations to key
distributors
Need for
improved supply
chain visibility.
Move to ERP
standardisation.
Keep it simple
Reverse
logistics
CONSUMERS
SUPPLIERS
Increasing
importance
of collaboration
with suppliers
Manufacturer
PLANNING
Increasing need for responsive supply chain including integration of demand,
supply & reverse logistics.
Move to planning standardisation within multinationals
INFORMATION TECHNOLOGY
Need for improved supply chain visibility. Move to ERP standardisation.
Keep it simple
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REFERENCE
1. ASEAN Food and Beverage markets - Updates and insights from the region by Austrade and
Australia Unlimited
2. Exporter guide: Food and Beverage in Vietnam by New Zealand Trade & Enterprise
3. Data source from Euromonitor
6. Soft drink industry and the economic impact of excise tax on non-alcoholic carbonated soft
drink in Vietnam by Dr. Nguyen Dinh Chuc
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