BizNEWS

Drinking Trends in Vietnam Will be Strongly Affected by Social Media

Diep Nguyen
BizLIVE -

The beverage industry is expected to continue to maintain strong growth momentum in 2020 with an average growth of 10.9%, due to increased people's income and that the trend of consuming higher value products.

Drinking Trends in Vietnam Will be Strongly Affected by Social Media
Jahanzeb Qayum Khan - CEO of Pepsi Suntory Vietnam
Recently, the United States – ASEAN Business Council organized the meeting for almost 50 USA companies to Vietnam to explore the opportunities for investment. On this occasion, BizLIVE held one interview with Jahanzeb Qayum Khan - CEO of Pepsi Suntory Vietnam reviewing the business environment in Vietnam and predicting consumer drinking trends.
From the start of your company’s business operation in Vietnam to the present, what is Suntory PepsiCo’s evaluation on the change of Vietnam’s business environment?
We started our business in Vietnam in 1994. At that time, the United States had just lifted its trade embargo on Vietnam and the wave of FDI enterprises investing in Vietnam just began. In the eyes of foreign investors, the Vietnam market at that time was a promising land but also risky, as it was a very new market. However, with the support of Vietnamese government and the public acceptance, we quickly realized that this is sustainable market for a long-term business investment.  
The development of Vietnam's economy in the past 25 years was admirable. The business environment quality has been significantly improved. I think in the medium-term, the Vietnam’s economic outlook is positive. After peaking at 7.1% in 2018, the GDP growth in 2019 slightly decelerated. However, GDP growth is projected to remain robust at around 6.5% in 2020 and 2021.  
Annual headline inflation has been stable for the seven consecutive years – at single digits, trending towards 4% and below in recent years. The external balance remains under control. The indicators of business environment quality have also been significantly improved by Vietnam, as published in the World Bank's reports. These factors have convinced foreign investors like us to have faith in this market and increase our investment. As a result, the FDI inflows reached almost US$18 billion in 2018.  
Vietnam is experiencing rapid demographic and social change. Its population reached 97 million in 2018 and is expected to expand to 120 million before moderating around 2050. With 70% of the population under 35 years of age, Vietnam is obviously a very attractive market, especially to FMCG companies like us. Vietnam’s human capital index is one of the highest among middle-income countries. This will be of interest for investors who come to do business in Vietnam, as they will enjoy a good quality human resources with high productivity, who can help to ensure a smooth business operation.  
With a stable growth of the economy, a young population structure and a high human capital index, Vietnam's business environment promises to be improved rapidly in the future.  
According to Suntory PepsiCo, how has the consumption trend of Vietnamese consumers changed since your company started the business Vietnam?
At the time we started business in Vietnam, bottled beverage was still a luxury product for Vietnamese consumers. To enjoy a bottle of Pepsi, consumers had to spend an amount equivalent to around 1/6 of the average daily income then. The daily beverages of Vietnamese people at that time were green tea, iced tea, etc. 
Along with the economy development, convenient bottled beverage became a mass product widely consumed by Vietnamese consumers daily. 
In recent years, in addition to the need for flavorsome, consumers have focused on finding healthy drinks. This has motivated us to produce more nutritious products with natural ingredients to protect consumers' healthiness. 
Obviously, with the improved living standards, consumers' demands are also higher. They are more careful about their consuming choices. This is a challenge and a motivation for us to improve the product quality to satisfy consumer needs and even to create new trends in the beverage industry. 
How does Suntory PepsiCo forecast the consumption trend in Vietnam in the next 3-5 years?
The beverage industry is expected to continue to maintain strong growth momentum in 2020 with an average growth of 10.9%, due to increased people's income and that the trend of consuming higher value products will dominate the market. In the coming years, it is certain that consumers will still prefer to choose products with healthy ingredients, with clear origins. 
In addition, the culinary experience of consumers will be strongly influenced by social media with the rise of pages and apps for food and beverage reviews. This factor needs to be considered by businesses when participating in the market during this period. In addition, the consumer convenience will be raised to higher level with the expansion of product distribution channels and 24/24-hour food delivery apps. 
Thank you for sharing!

DIEP NGUYEN