Workers at a production line for the "333" brand canned beer produced by the Saigon Beer -Alcohol-Beverage JSC in Dung Quat. — VNA Photo Thanh Long

HA NOI (Biz Hub) — The domestic beverage market has seen fierce competition as nearly half the market share last year belonged to foreign firms.

Chairman of the Tan Hiep Phat Beverage Group Tran Quy Thanh told a conference, held in Ha Noi last week to review the sector's business results and launch tasks for 2015, that the market shares of Vietnamese beverage enterprises have fallen after periods of strong development.

Thanh added that domestic businesses faced challenges in the market mechanism and international integration.

"The non-alcohol beverage sector has seen yearly double-digit growth rate of 13 per cent in the 2011-14 period. The growth is expected to be 20 per cent in the 2015-19 period," he said.

Statistics from the Viet Nam Beverage Association showed that last year, the market was worth VND77.5 trillion (US$3.64 bilion), posting a nine per cent year-on-year increase.

Bottled green tea, herbal tea and tonic water claimed large shares of the market, with expected growth rates of 17.8, 27.6 and 24.7 per cent respectively in the 2015-19 period.

Other sectors, including carbonated soft drinks, sport drinks and dairy milk were forecast to have high growth rates of 11.8, 28.2 and 23 per cent respectively.

The association said that Vietnamese consumers use beverages not only for refreshment, but also for their health, as the consumption of herbal tea has been increasing over the years.

Vietnamese businesses have been competing in terms of product and human resource. Foreign beverage groups have the advantages of being old trademarks and having high-quality human resources.

In addition, preferential policies were not clear, giving domestic companies the advantage, while the government has not set any penalties for transfer pricing.

The chairman said that local beverage businesses should have a deep knowledge of consumer habits as well as support from the government.

Beverage firms should give priority to health issues in their business strategy.

In addition, Vietnamese firms should be creative, intelligent and distinctive in their strategy as well as create new and pioneering products.

Businesses should have good infrastructure, closed processes and computerisation to improve their effectiveness. — VNS