Foreign beverage companies are looking to make inroads into Vietnam which is standing out as one of the most promising markets thanks to its sustained growth.

Consumption of beverages, including alcoholic and non-alcoholic drinks, in Vietnam is on the rise with an annual increase of 6%-8%, reaching 81.6 billion liters in 2016, and is projected to hit roughly 109 billion liters by 2020.

Beverage consumption in Vietnam posts annual growth rate of 6%-8%. Source: EVBN

Beverage consumption in Vietnam posts annual growth rate of 6%-8%. Source: EVBN

The industry is characterized by a growing population and a rising number of middle income individuals, according to the EU-Vietnam Business Network (EVBN), a project co-funded by the European Union and established in 2014.

Consequently, various foreign beverage companies have been expanding their footing to this lucrative market, creating a competitive market environment.

While local manufacturers diversify their product portfolios in response to more demanding consumers, the high-end segment, which often brings higher margin, is dominated by foreign players, especially in the alcoholic drinks sector.

The involvement of foreign players has posed certain difficulties for local beverage manufacturers due to the limited capital budget and expertise in establishing influential brand names, according to a report by the EVBN, which strengthens the EU business sector in facilitating market access in Vietnam by advocating and engaging primarily with the Government of Vietnam, the Vietnamese business sector and other stakeholders.

The master plan of development for beverage industry by 2025 by the Ministry of Industry and Trade has defined that:

Beverage capacity in Vietnam in 2015-2020. Source: EVBN. Chart: Linh Pham

Beverage capacity in Vietnam in 2015-2020. Data: EVBN. Chart: Linh Pham

(1) Beverage capacity in the northern mountainous region is targeted to account for 8% of the

country’s total by 2025, the Red River Delta 22%, the north-central region 19.5%, the Central Highlands 2.5%, the southern region 31%, and the Mekong Delta 17%.