There will be stiff competition between domestic and foreign beveragefirms as Vietnam integrates further into the world beverage market, withtremendous potential for development, said experts.

Accordingto the Vietnam Beer, Alcohol and Beverage Association, average demandfor bottled soft drinks for one Vietnamese is just three litres per yearwhile the demand is 50 litres per year for one Filipino, reported Doanhnghiep & Thuong mai (Enterprises and Commerce) magazine under theMinistry of Industry and Trade.

A study by the VietinbankSecurities Company said that total revenue of the domestic soft drinkindustry reached 11.87 trillion VND (561.9 million USD) and consumptionof the industry was around 2 billion litres last year.

In theperiod of 2009-2013, with 130 producers, the industry showed growth rateat 19.35 percent in business, including 2 million litres for exports.The growth rate is expected to reach 14.2 percent from 2014 to 2018 with135 producers.

The local economy has been in difficulty due tothe prolonged financial crisis and customers have tightened theirpurse-strings. However, Vietnam's population has reached 90 million witha majority being youth who often consume soft drinks, the company said.Therefore, this factor would attract soft drink producers to increasetheir investment in the local market to get a higher market share, itsaid.

The industry expected to produce 2.32 billion litres ofsoft drinks and reach 506 million USD in revenue for this year and by2016, these figures are expected to reach 2.62 billion litres in outputand 626 million USD in revenue.

The association said manyVietnamese soft drink producers have upgraded their production capacityto compete with foreign rivals. They have also focused on the productline of soft drinks that improve the health of customers and increasemarket share.

Meanwhile, foreign investors like Coca-cola, Pepsiand Nestle with LaVie water, have also increased their share in thebusiness in Vietnam, or implemented mergers and acquisition activitieswith local firms including Masan, Kirin Holding of Japan andUni-President of Taiwan to increase their market shares in Vietnam, theassociation said.

Deputy Minister of Industry and Trade Ho ThiKim Thoa said the local beverage industry is facing many challenges atpresent, including a lack of protectionist policies from the State dueto integration into the regional and world markets. So, the localenterprises should improve products and reduce prices to compete withforeign competitors.

She said the Trans Pacific Partnership(TPP) agreement that is expected to be signed in the near future wouldbring numerous opportunities to export soft drink products to marketsunder TPP and join the global value chain for local enterprises. Shealso called for more investment in the beverage industry.

But the TPP will also pose challenges to local producers who compete with foreign rivals, Thoa said.

DeputyChairman of the Association of HCM City Enterprises, Pham Ngoc Hungsaid the beverage industry should learn from Vietnamese washing-powderand toothpaste producers who were swallowed up by well-knowninternational firms. The local firms should plan on staying and activelydeveloping their existing market shares.

Nguyen Quang Anh,Customer Director of the Neo Advertising Company, said the localbeverage market has not seen prominent companies mainly due to the poorworkforce and financial inability.

To have Vietnamese trademarks on the local beverage market, the local firms should find specificproducts and have the right trade mark strategy, he said.-VNA