The firm will soon put into operation a $39.7 million beer and beverage factory in the northern province of Bac Ninh’s Tien Son Industrial Park. The new facility will have the annual output of 150 million litres of soft drinks, 20 million litres of beer and 100 million litres purified water.

The V Cola brand will be the first domestically-produced carbonated drink, Nguyen Huu Duong, general director of Hoa Binh told VIR.

Duong said that the new facility would operate the most modern product lines imported from Germany. He believed V Cola retailed at just two thirds of the cost of Coca-Cola or Pepsi would be able to compete with the global drinks giants for their giant share of the domestic market. Coca-Cola and Pepsi occupying about 60 per cent of the Vietnamese beverage market, according to Ministry of Industry and Trade (MoIT).

Domestic companies such as Tribeco did previously attempt to produce carbonated  drinks, but failed to compete with the international heavyweights. However, Duong said that if domestic beverage companies had a proper business strategy, they could successfully develop a foothold in the carbonated drink market.

Hoa Binh, a property developer most well-known for its Hoa Binh Green City took the decision to enter beverage production.

The latest report by London-based Business Monitor International, a leading independent provider of proprietary data, analysis, rankings and forecasting revealed Vietnam’s beverage industry’s business growth during 2013-2017 stood at about 20 per cent due to increasing consumption.

According to the MoIT, the beverage industry has significantly contributed to Vietnam’s economy. To date, the beverage sector accounts for about 15 per cent of the country’s GDP and this is likely to continue increasing.

Vietnam’s beverage market has proved attractive to both domestic and foreign beverage companies, with more money being poured into expansion in the sector.

In August this year, Tan Hiep Phat (THP), one of Vietnam’s leading beverage groups, officially put into operation a $85 million beverage plant in the northern province of Ha Nam’s Kien Khe Industrial Park with the  designed capacity of 300 million litres per year in the first phase, which will expand to 600 million litres per year in the second phase during 2018-2022. The group will continue focusing on its strength in tea with products such as Dr Thanh and Number 1. The group is investing in other plants in Binh Duong, Quang Nam and Hau Giang provinces. Once all are in operation, THP will annually provide around two billion litres of products, Tran Uyen Phuong, deputy general director of THP told VIR.

Phuong said that since it was near to impossible to compete with foreign giants such as Coca-Cola and PepsiCo in the carbonated drinks market, domestic beverage companies have chosen to focus on non-carbonated alternatives.

Coca-Cola also plans to invest additional $300 million in the Vietnamese soft drink market by 2015. Meanwhile, PepsiCo Vietnam formed a joint venture with Japan’s Suntory Holding Ltd in which Suntory would buy a 51 per cent stake in PepsiCo’s Vietnamese beverage business. The company poured $118 million into two beverage plants in Dong Nai and Bac Ninh provinces.

Masan, one of Vietnam’s largest fast moving consumer goods companies, plans to expand its beverage business through buying a beer plant in the central province of Phu Yen, and through promoting its own brands such as Vinacafe and Vinh Hao this year.