Masan ready to pour into domestic drinks market

Vietnam’s non-alcoholic beverage market features 134 manufacturers

Masan Group plans to become a more consumer focused company and is currently in the process of establish Masan Consumer Holdings (MCH) to consolidate it stakes in Masan Consumer under one company while acquiring other consumer companies. 

This year, Masan Consumer acquired a 62 per cent stake in the iconic Vinh Hao Mineral Water Company, expanding its beverage portfolio which also includes Vinacafe Bien Hoa, and strengthening the beverage platform with the hiring of Le Trung Thanh, the former CEO of Nutifood and senior executive at PepsiCo Vietnam.

Vinh Hao is not just about mineral water

Vinh Hao has been in the Vietnam market for over 80 years as a leading mineral water producer. Masan’s acquisition of Binh Thuan province-based Vinh Hao however does not mean it will only focus on mineral water products.

Last month, Vinh Hao announced the board resolution to expand into other businesses. This implies Masan will broaden Vinh Hao’s product portfolios to other categories, including RTD tea, soft drinks, juices and energy drinks,  underlining the group’s ambitions.

Moreover, the private group has set up the Masan Beverage department with veteran former CEO of Nutifood Le Trung Thanh as managing director. Before joining the nutrition products company, he had been deputy CEO of PepsiCo in Vietnam where he led a team to transform the flagging energy drink Sting into a leading market brand. Thanh also developed the Aquafina bottled water brand at PepsiCo as well as achieved success for Poca after launching the snack brand in 2006.

To date, Masan has not revealed any new beverage lines as it needs more time to gauge the market during a testing study. However, Masan Consumer announced at the company’s annual general meeting in April 2013 that it would launch three completely new products over the next year.

Competition picture

The non-alcoholic beverage market has seen various products from established brands for all segments. Competition Administration figures show that by 2012 Vietnam was home to 134 both local and foreign beverage manufacturers,  with the top ten in terms of revenue including IBC, Tan Hiep Phat, Coca - Cola, PepsiCo, Interfood, Red Bull, La Vie, Chuong Duong Beverages, CKL, and Vinh Hao.

These leading names have faced stiff competition from newcomers or smaller players. The top ten held market share of almost 96.7 per cent in 2010 but that shrank to 75.6 per cent last year, marking an increase from 3.3 per cent in 2010 for the rest to a 24.4 per cent market share last year.

In addition, the Vietnam market has witnessed the new trend with more and more consumers shifting from boiled to bottled water; and from unbranded beverages to branded alternatives. This has underscored the need to deliver better and more varied branded products for a thirsty consumer market.

According to Euromonitor, the Vietnamese bottled water and bottled beverages market is expected to grow at 20 per cent per year in the 2011-2015 period in which estimated market size of $2.5 billion.

A veteran

“We are continuously evaluating new product opportunities in areas that will appeal to our target markets and where we believe we will be able to leverage our established distribution network and brand-building capabilities, both in our existing product areas and in new product areas. This allows us to strengthen our market share and achieve higher than average profitability.” Venkatesh, Masan Group’s head of group strategy said.

Market analysts believe it is still too early to say if Masan would succeed in the new business, but its new expansion has alerted big market players.