Report
Vietnamese bottled water market on the up
Bottled water in Vietnam is being given a boost thanks to its convenience and the questionable quality of the country’s municipal water. That’s the finding of Frost & Sullivan’s latest analysis of the region, which says that the market is likely to earn revenues of $82.1m by 2015.
The ‘Bottled Water Market in Vietnam’ report also found that consumers are willing to spend money on bottled water, particularly in urban areas, as they’re becoming increasingly aware of the health issues surrounding the quality of tap water.
The bottled water market is dominated by a few notable foreign companies and a host of local manufacturers, but entry barriers are low due to the positive investment climate in Vietnam. Once they gain a toehold in the market, participants have to ‘strategise’ to deal with the presence of certain environmental support groups or individuals that oppose the sale and consumption of bottled water, as the bottles are deemed environmentally unfriendly.
However, the biggest challenge for market participants is the increasing cost of production, from raw materials of the bottles to logistics. Companies have to be price-conscious, as the majority of Vietnamese are not considered affluent.
Cost optimisation in production and logistics is essential to remain competitive. Additionally, bottle recycling isn’t common in Vietnam, as the country doesn’t have adequate facilities.
“The factors that entrants must consider when entering the bottled water market in Vietnam are technological, transportation and labour costs,” says Frost & Sullivan consultant Melvin Leong. “Smaller manufacturers that offer relatively lower priced products are a constant threat to even the largest bottled water company in Vietnam.”
Participants can take heart, however, from the increase in consumers’ disposable incomes, which is likely to increase the affordability of bottled water. The upturn in the country’s tourism industry is also a positive sign for the bottled water industry.
Source: Frost & Sullivan
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