VietNamNet Bridge – The two big guys -- Coca-Cola and Pepsi, have slashed their glass bottled products’ prices. Who would be the victims of their move?

Experts have recalled the days in 1990s, when the similar move of reducing the selling price dislodged Vietnamese Tribeco out from the market.

In 1998, Coca Cola slashed its selling price by 30 percent from VND31,200 to VND20,600 for big bottled products, while Pepsi also slashed its price from VND31,200 to VND20,000 per box of 24 bottles.

Tribeco then had to reduce the selling price too, from VND950 to VND660 per bottle.

However, Tribeco could not compete with the big guys with the powerful financial capability. Due to the slow sale, Tribeco’s output dropped from 30 million liters in 1998 to 4 million liters in 2000, while the profit dropped from VND6.8 billion to VND0.2 billion.

As a result, Tribeco had to run away from the fizzy soft drink market and jumped into a new land – the bottled soya milk and fresh fruit juice.

Do Hoa, CEO of IME, a consultancy firm, noted that glass bottled soft drink market is the shelter for Vietnamese enterprises which have limited capability. And now, when the foreign manufacturers attack the shelter, the Vietnamese enterprises may be knocked out after a period.

Who would be the next victim of Pepsi and Coca Cola?

The Tan Hiep Phat story

When commenting about the moves taken by Pepsi and Coca Cola recently, Hien from Bidrico said: “They may try to swallow the fizzy drink market first, and then they would focus on still drink market.”

The two big guys, while dominating the fizzy drink market, still cannot control the still drink market, which is growing very rapidly in Vietnam. In the market, Coca Cola and Pepsi will have to confront the Vietnamese Tan Hiep Phat.

Tan Hiep Phat is a success story about how a company can make big money in a niche market.

In 2001, Tan Hiep Phat gave up the Ben Thanh beer brand, which could not compete with Saigon beer, to jump into an unfamiliar market – energy drinks.

At that time, Number 1, which fits the taste of the young with the special flavor, quickly won the heart of the youth, which then helped Tan Hiep Phat succeed more than expected.

After Tan Hiep Phat’s success with Number 1, Coca Cola and Pepsi launched similar products, namely Samurai and Sting to compete with the Vietnamese product

Pepsi’s Sting with strawberry flavor then conquered the young people’s hearts, which allowed Pepsi to jump into the No 1 position in the energy drink market.

After losing the No. 1 position to the hands of Pepsi, in 2006, Tan Hiep Phat began exploiting the bottled green tea market, making the market seething.

As the pioneer, Tra Xanh Khong Do, a green tea product of Tan Hiep Phat, has been witnessing the 2-digit growth rate in the last few consecutive years. Especially, in 2008, the growth rate was sky high at 800 percent.

The attractiveness of the products to consumers then led to the appearance of a series of other green tea products, including the ones of the big guys Pepsi and Coca Cola.

Pepsi then bought Lipton brand from Unilever and launched bottled Lipton Pure Green products, with which it officially joined the “Green tea war” in 2008.

Just some months later, Coca Cola also jumped on the bandwagon with Tea Left. However, both of them still cannot “overturn the game situation” as they could do with energy drinks.

NCDT