VietNamNet Bridge – The carbonated beverage market, which is controlled by the two giants Pepsico and Coca-Cola, may be remapped with the appearance of a newcomer.

A 100 percent Vietnamese-owned company has joined the carbonated beverage market. Hoa Binh Company has officially inaugurated a drink factory in Tien Son Industrial Zone in the northern province of Bac Ninh.

Hoa Binh is a “big guy” in its core business field. It has been well known as a malt producer and supplier for breweries, and as a real estate developer. It developed Hoa Binh Green City, an upscale apartment complex.

However, Hoa Binh is a “rookie” in the carbonated beverage market, now controlled by Pepsi and Coca-Cola.

In the past, Vietnamese enterprises have attempted to battle with the two foreign giants to regain the domestic market, but they have all failed.

Even Tan Hiep Phat, considered a big beverage manufacturer, has yielded to the two giants, now gathering its strength on still beverage products.

Ten years ago, another Vietnamese enterprise, Tribeco, also tried to jump into the carbonated beverage market. But it failed completely and had to give up, leaving the market for Pepsi and Coca-Cola to exploit.

A report of Vriens & Partner, a consultancy firm, showed that each Vietnamese consumed 10 liters of carbonated drinks in 2013, much lower than 103 liters in the UK, 21.6 liters in Japan, 84.2 liters in New Zealand and 216 liters in the US. This indicates there could be untapped potential.

This could be the reason why foreign giants continue to pour more money into the Vietnamese market, even though they have been repeatedly incurring losses from doing business in Vietnam.

Coca-Cola has announced its investment capital in Vietnam would reach $300 million, while Pepsi has decided to spend $120 million to build two new factories in Dong Nai and Bac Ninh provinces.

According to Nguyen Huu Duong, general director of Hoa Binh, the “weapon” Hoa Binh would use in the battle with Pepsi and Coca-Cola is exactly the weapon the two giants used 10 years ago to knock down Tribeco.

“They incur losses when they sell a can of fizzy drink for VND7,000. Meanwhile, we will sell at VND4,500-5,000, and we will still make profit,” Duong said.

However, analysts warned that Duong may fall into his own trap when trying to set low prices.

“The weapon would be useful only for those with powerful financial capability. Meanwhile, the majority of Vietnamese enterprises have limited financial capability,” a branding expert noted.

Chi Mai