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Vietnam’s soft drinks - opportunities for export expansion

VIETRADE - There are several subsectors in Vietnam’s beverage industry that provide intriguing opportunities for foreign investors and exporters looking to capitalize on the various FTAs coming into effect. Vietnam’s soft drinks and fruit juice market in particular has stood out for its impressive growth in recent years. The soft drink sector accounts for 70% of the total production value and the consumption demand is rising, especially in natural origin and good health products (VNS).

 

With the advantage of natural resources like abundant mineral water, various fruits, soft drink market has large-scale, high rate of the growth and gradually met the domestic demand while eying for export markets at the same time. In the sector, ready-to-drink tea, bottled water and carbonated drinks take the largest proportion of consumption. Between 2009 and 2013, Vietnam’s bottled soft drink industry grew at a rate of 19.4 percent, and is projected to maintain a 14.2 percent growth rate from 2014 to 2018.

 

Despite rapid growth, there is still significant room for further expansion especially for soft drink’s export markets. Asia such as Thailand and Hong Kong is the fastest growing market for exporting Juice and importing carbonated drinks. And soft drinks, together with bottled teas, sports drinks, and milk represent growing subsectors of the beverage industry, particularly for a population that is increasingly health conscious such as the EU, the US. The Vietnamese government has pursued several free trade agreements to promote both regional economic integration and deeper ties with Western countries through enhanced economic, trade, investment relations and export expansion. It is forecasted that due to trade agreements between Vietnam and the EU, the U.S., and other ASEAN countries, along with other tariff reductions already in effect, Vietnam’s soft drink export will see more increases in the coming years. Big Free Trade Agreements such as the EU-Vietnam Free Trade Agreement (EVFTA), Trans-Pacific Partnership (TPP), and ASEAN Free Trade Area (AFTA) greatly reinforces the development potential of Vietnam’s beverage market including soft drink subsector, allowing Vietnam’s beverage market to integrate seamlessly into the global economy.

 

Key markets for Vietnam soft drinks are countries in Asia, the Middle East, and Europe. Particularly, Asian countries such as Thailand, China, Malaysia and Seoul Korea consumes the most of Vietnam’s current soft drinks export due to their dense population making their domestic supply not able meet demand. Singapore and Malaysia are also the two largest soft drink- consumed markets of Vietnam due to their high demand. Besides, soft drinks are subject to tariff exemption in these countries, so Thailand, Hong Kong and Malaysia also act as the import- export intermediate to limit tariff barriers. Asian market is followed by European countries, specifically Netherland playing as a gateway for Vietnam products to enter the EU and the US market because consumers have become more and more aware of health and natural favored products.



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