Byravee Iyer
Aug 28, 2013

Coca-Cola pushes fruit juices in Vietnam

ASIA-PACIFIC - Coca-Cola is best known for its soda brands, but in high-growth Vietnam, the world’s largest beverage company is keen to develop a market for fruit juices.

Juices represent a large opportunity in Vietnam
Juices represent a large opportunity in Vietnam

Ahmet Bozer, Coke’s international president met with Vy Huy Hoang, Vietnam’s Minister of Industry and Trade on 13 August to discuss the company’s expansion plans in the country.

Local news reports said Bozer raised a proposal to invest US$300 million and employ 500 local workers for its fruit juice business. The ministry is said to have extended its support while encouraging Coca-Cola to use locally grown fruit and raw materials.

Globally, Minute Maid is Coke's best selling fruit juice brand. It also has locally made and marketed fruit juices in certain countries. For instance, it sells Earth & Sky and Eight O’ Clock in the Philippines. Bozer hasn’t specified whether Coke plans to create a local brand in Vietnam or expand its Minute Maid range. He didn’t commit to a date for the launch either.

At stake is a growing market. According to market research firm Euromonitor, the fruit-juice category grew 22.1 per cent in 2012, while the concentrated drinks segment increased 13.7 per cent. Carbonated drinks meanwhile grew just 12.7 per cent during the same period.

At present, PepsiCo, with its Tropicana range, leads the category with 25.4 per cent market share, followed by homegrown player Vietnam Dairy Products with 18 per cent of the market.

Globally, Tropicana outsells its rival Minute Maid. In fact, Pepsi's brands have higher market share in most of the fast-growing categories including bottled water, juices and sports drinks. However, over the last year Pepsi lost significant market share to Vietnam Dairy Products, which gained six percentage points. Trade Holdings has about 9.4 per cent of the market. Coca-Cola has a tiny presence in the market but accounts for just 7.5 per cent of market share.

“The juice drink category in Vietnam still has a lot of room to grow,” said Trang Nguyen, research analyst, Euromonitor. “The country has a large young population that likes to try new drinks and per capita for juice drinks is still quite low compared to other Asian countries like Singapore and Taiwan.”

Another crucial reason for Coca Cola’s decision is the growing awareness of health and wellness in Vietnam. “Vietnamese consumers are starting to pay more attention to health and wellness, which will stimulate higher demand for juice,” Nguyen pointed out.  

Consumers in Vietnam believe that drinking fruit juices increases their daily intake of fruit, translating to a healthier lifestyle. Therefore, urban consumers, who don’t have the time or inclination to eat real fruit, rely on fruit juices instead.

In another effort at diversifying into the health category, Coca-Cola recently announced plans to launch its first herbal drink, Habu, in Thailand. Industry experts believe that if the brand takes off in Thailand, it is likely to be launched in other markets too.

Over the last five years, Coca-Cola has steadily increased its investment in Vietnam. Since 2004, it has pledged more than $700 million to grow the market and has created more than 27,000 direct and indirect jobs in the country, according to the company.

In early August, Coca-Cola shifted its $20 million media account from Starcom to MediaCom. “Vietnam is one of the key focus markets for Coca Cola,” said Coca-Cola spokesperson Pham Nha Uyen at the time of the pitch.

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