Consumers may be curbing their intake of carbonated soft drinks in many markets, but in Vietnam, the soft drinks segment is set to break the 1bn litres barrier in 2015, according to a new report by Canadean.

The CSD landscape in Vietnam has been expanding rapidly over the last few years, from 587m litres in 2010 to 836m litres in 2014, increasing at a CAGR of 9.2%. This growth is due to a rising population, increasing incomes and the development of an important consumer group – the young urban professional.

“The pace of urbanisation is high and over half the population in Vietnam is under 35 years old, which gives another huge demographic push to the carbonates category,” said Canadean analyst Erica Shaw.

Favourable trading conditions for international investment

Trading conditions are favourable for international investment in Vietnam, with the Government recently exempting carbonates from a Special Consumption Tax, which has been applied and increased on other goods, such as cigarettes, beer and spirits. “The government’s decision … gives an extra ‘green light’ for companies wishing to invest in carbonates in Vietnam,” added Shaw.

Enticing new products appeal to young urban consumers

Last year saw the launch of several enticing new products aimed at young urban consumers, including Tropicana Frutz from Suntory PepsiCo Vietnam Beverage. The drink, available in apple and trendy 'cocktail' flavours, and packed in an easily-transportable 33cl PET bottle, taps into the street-style culture in Vietnam. Coca-Cola Sabco has also been successful in combining international campaigns with local needs. For example its ‘Happiness Truck’ was featured in promotions during T?t, the Vietnamese New Year.

Carbonates consumption driven by blossoming fast food chains

Even though the Vietnamese market is responding to health awareness, with low-calorie options such as Coca-Cola Light proving to be popular, it is regular CSDs that are driving growth at the moment. Furthermore, fast food chains are blossoming in cities where eating out is increasing along with the improving economy. McDonald's has just entered the market place, which will also help carbonates to expand further.

“The global giants have an overall dominant influence and set the trends, which the rest of the market has to follow,” said Shaw.