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Chances and challenges for juice companies in Vietnam

Chances and challenges for juice companies in Vietnam

Tuesday 22, 06 2021
Juice companies in Vietnam have been growing well recently. However, there remain difficulties that challenge the juice manufacturing industry.

Juice companies and the shifting beverage consumption trend

Juice companies in Vietnam can grow quite well in the future, as per the reasons listed below.

The beverage industry in Vietnam is considered a strong industry, contributing greatly to the fast-moving consumer goods (FMCG) segment. The industry is accompanied by the country’s economic growth, the changing lifestyles and preferences, and the increasing number of middle-class consumers. Beverage consumption in Vietnam has an annual growth rate of 6 percent, becoming the driving industry of Vietnam’s economy.

While the beer segment is still the strongest in the Vietnam beverage industry, changes are undergoing. Although subtle, the non-alcoholic drink industry has been growing over recent years, with an expected growth rate of 6.5 percent until 2023.

With a young population, accompanied by the growing middle-class, the trend for the beverage industry will be products with organic origin and environment friendly. When nutritious products such as juice, smoothies, milk, etc., become more popular, the need for consuming healthy products will also rise, resulting in a chance for growth in these lines of products. A survey conducted by B&Company has shown that Vietnamese customers tend to assume fruit and vegetable juice as the most popular health drink.

Healthy Drink

Vietnamese consumers are paying more attention to healthier drinks and are willing to pay for better quality goods that will be good for their well-being. Carbonated soft drinks are being consumed less; its revenue growth fell from 27.9 percent in 2011 to 9.3 percent in 2019. Meanwhile, fruit juices, milk fruit juices, and herbal teas are now getting the Vietnamese’s attention.

Seeing these opportunities, foreign investors have made their moves, introducing healthy beverage products into the Vietnamese market. Coca-Cola and Suntory PepsiCo, the two names familiar to Vietnamese, have soon introduced their juice brands to the market and stood their ground. Suntory PepsiCo introduced the Twister orange juice under the brand Tropicana. Coca-Cola provides Minute Maid, a brand that is also well-known in Vietnam for its orange juice products.

Vinamilk

Domestic companies also started producing healthy and nutritious beverages to meet the needs of customers. The Vfresh brand of Vinamilk is popular in the market, providing various fruit juices such as orange, apple, guava, etc. TH Food Chain Joint Stock Company also set up its juice brand called TH True Juice, provides customers with orange juice, apple juice, mango juice while also creating juice with an authentic flavor, such as the apple-gac fruit juice.

Juice consumption during the pandemic

In 2020, due to the impact of COVID-19, the FMCG segment in Vietnam faced a lot of difficulties. The beverage industry is one of the most important industries in the segment, and while it has been growing strong in recent years, the pandemic dealt a severe blow to the industry in 2020.

The General Statistics Office has reported that within the first quarter of 2021, the unemployment rate has increased by nearly 2.42 percent, which led to a decrease in the need for shopping. The consumer price index in March 2021 reduced by 0.27 percent.

Juice

With the purchasing power weaken, the FMCG segment, especially the beverage industry, has been under pressure. Customers tend to buy only items to provide for their necessities. Consumption of non-alcoholic drinks reduced by 9.2 percent compared to 2019 and by 12.9 percent for alcoholic ones.

The closing of food and beverage chains has contributed to the decrease in beverage sales, as these outlets are a crucial source of revenue for the drinks industry.

However, as the pandemic spreads out, customers tend to spend more on healthy, organic products, plant-based products, nutritious products that can be consumed conveniently. Customers are also cutting down on payment for alcoholic drinks. That can be an opportunity for juice companies to reach potential customers.

In conclusion, beverage firms, juice companies in Vietnam in particular, can take the temporary halt caused by the pandemic as a chance to improve and adjust beverage products towards the taste of Vietnamese customers. With the tendency to use more nutritious products to maintain a healthy lifestyle, Vietnamese may choose to drink fruit and vegetable juice more in the future.

 

Compiled by VietnamCredit

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