The struggle in the US$2 billion bottled tea market
More than 80% of the market share for bottled tea, an industry valued at US$1.7 billion, belongs to three big players.
 |
Tan Hiep Phat Company with Tra Xanh Khong Do, URC with C2 and Suntory Pepsi Co with Tra O Long are the names dominating the market.
Like other countries in the world, the consumption of soft drinks is increasing rapidly in Vietnam. The consumption level of sugary drinks in Vietnam was 6 liters per head in 2000 and soared to 44 liters in 2016.
Statista estimates that the Vietnamese beverage market will be worth US$3 billion in 2018. It is expected to maintain a 15.1% growth rate in 2018-2021.
Of beverage products, ready-to-drink (RTD) tea is in the first position. According to Euromonitor, Vietnamese consumed 2 billion liters of the product in the latest year.
Statista believes that the revenue of the industry may increase twofold from US$1.69 billion in 2015 to US$3.7 billion by 2020.
Established in 1994 and focusing on bottle tea products right from the beginning, Tan Hiep Phat became one of the trio of market leaders with Tra Xanh Khong Do (green tea) and Tra Thao Moc Dr Thanh (herbal tea) products.
However, after the scandal in which a fly was found in a product, Tan Hiep Phat’s market share dropped from 55% in 2012 to 40% three years later. By early 2016, its market share had dropped to 36%.
Similar things happened with URC, a Filipino invested enterprise. It arrived in Vietnam when the market was fledgling and reaped fruit with C2 products.
However, because of a scandal about product quality, its achievements were erased. Just within one year, the company lost half of the market share, from 35-40% three years ago to 15%.
Joining the Vietnamese market in 2013 through a joint venture with PepsiCo, Suntory Holding has become a rival of Tan Hiep Phat and URC. The Japanese company makes use of a large distribution network and the strong brand of Pepsi.
Realizing that Vietnamese consumers have heightened their awareness of products to protect health, the company decided to make black Oo Long tea, which is also famous in Japan.
According to Nikkei Asia Review, Suntory’s TEA+ in Vietnam is a ‘copy’ of Black Oolong Tea in Japan, but with sugar. A TEA bottle sells for 20% higher than products of domestic rivals.
The media crisis which occurred with Tan Hiep Phat and URC gave Suntory a great opportunity to expand its business in Vietnam.
By the end of the first quarter of 2018, Suntory had ousted URC to become the second largest manufacturer with 15.8% of market share.
