Tea - Vietnam

Euromonitor International : Country Sector Briefing March 2011

Tea

Vietnam

List of Contents and Tables

Headlines ................................................................................................................................................................. 1 Trends ...................................................................................................................................................................... 1 Competitive Landscape .......................................................................................................................................... 1 Prospects .................................................................................................................................................................. 2 Category Data ......................................................................................................................................................... 3 Table 1 Fruit/Herbal Tea by Type: % Off-trade Volume 2006-2010 ............................................. 3 Table 2 Retail Sales of Tea by Category: Volume 2005-2010 ....................................................... 3 Table 3 Retail Sales of Tea by Category: Value 2005-2010 ........................................................... 3 Table 4 Retail Sales of Tea by Category: % Volume Growth 2005-2010 ...................................... 3 Table 5 Retail Sales of Tea by Category: % Value Growth 2005-2010 ......................................... 4 Table 6 Tea: Standard Vs Pods 2005-2010 .................................................................................... 4 Table 7 Tea Company Shares by Retail Value 2006-2010 ............................................................. 4 Table 8 Tea Brand Shares by Retail Value 2007-2010 ................................................................... 5 Table 9 Forecast Retail Sales of Tea by Category: Volume 2010-2015 ......................................... 5 Table 10 Forecast Retail Sales of Tea by Category: Value 2010-2015 ............................................ 5 Table 11 Forecast Retail Sales of Tea by Category: % Volume Growth 2010-2015 ........................ 6 Table 12 Forecast Retail Sales of Tea by Category: % Value Growth 2010-2015 ........................... 6 Table 13 Tea: Forecast Standard Vs Pods 2010-2015 ...................................................................... 6

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TEA IN VIETNAM
HEADLINES
Tea sees retail volume sales growth of 4% to reach nearly 11,700 tonnes in 2010 Stronger retail volume sales growth is seen in 2010 than in 2008 and 2009, as the Vietnamese economy begins to recover Fruit/herbal tea records the highest retail volume sales growth of 9% in 2010 The average retail unit price of tea increases by 1% in 2010, as a result of inflation and increasing production costs Vinatea - Vietnam National Tea remains the leading player in accounting for a retail value sales share of 36% in 2010 Retail volume sales are expected to see a CAGR of 3% over the forecast period, compared to the CAGR of 4% seen over the review period

TRENDS
Green tea, which is traditionally the most popular tea type in Vietnam, accounted for a 64% share of tea retail volume sales in 2010. However, as a result of nearing maturity, green tea saw the lowest retail volume sales growth of 1% in 2010. Meanwhile, the newer black, instant and fruit/herbal tea categories recorded relatively high retail volume sales growth, albeit from relatively limited bases. Tea saw retail volume sales growth of 4% in 2010, which was stronger than the corresponding figures seen in both 2008 and 2009. Improved performance in 2010 was largely attributable to a strong economic recovery. Fruit/herbal tea saw the fastest retail volume sales growth of 9% in 2010. Despite this strong performance, consumption of fruit/herbal tea remained relatively low, in accounting for a 10% share of tea retail volume sales in 2010. The performance of fruit/herbal tea was negatively impacted by low consumer awareness and limited interest in purchasing such products. Increasing consumer health-consciousness drove the strong retail volume sales growth seen by fruit/herbal tea in 2010. Instant tea saw the second strongest retail volume sales growth of 9% in 2010. Increased consumption was seen, due to instant tea satisfying consumer demand for convenience. Furthermore, the increasingly wide range of flavours available saw its popularity grow among younger consumers. The average retail unit price of tea increased by 1% in 2010, mainly driven by rising production costs and world commodity prices. High inflation served to increase labour and processing costs, as well as electricity and water charges. Furthermore, Vietnam is the worlds fifth largest exporter of unprocessed tea, and the record export prices seen in 2010 affected domestic raw tea prices. Vietnamese consumers are used to drinking tea at home as a cheap alternative to coffee and other beverages. As a result of this long-established tradition, off-trade volume sales accounted for a 76% share of total tea volume sales in 2010. On-trade volume sales saw growth of 10% in 2010, and, in so doing, gained sales share at the expense of off-trade volume sales. This development was driven by the increasingly hectic pace of modern life, which resulted in consumers increasingly enjoying tea on-trade. Furthermore, a greater variety of tea types and flavours were available on-trade, as well as a wider selection of premium products. Unpackaged tea sold through small grocery retailers, was traditionally the most popular format in Vietnam. In 2010, unpackaged tea continued to account for a large proportion of total volume sales, as price-sensitive consumers with ingrained habits continued to show a preference for unpackaged tea. As living standards continued to increase in Vietnam over the review period, packaged tea proved more favourable in terms of guaranteed product quality and hygiene. Packaging also helped in winning consumers, due to its convenience.

COMPETITIVE LANDSCAPE
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In 2010, Vinatea remained the leading player in tea in Vietnam, in accounting for a retail value sales share of 36%. Unilever followed on a second-ranking 14% share of retail value sales. Vinatea maintained its leading position thanks to the advantage it enjoys over competing players in terms of capital, experience, technology, human resources and the wide range of tea products that it offers. Despite the decline in retail value sales share seen over the review period, as a result of the rise of international and domestic companies, Vinatea is expected to remain the leading player over the forecast period. Cau Tre recorded the highest retail value sales growth of 44% in 2010, mostly due to the strength of its brands, which are established in both hot drinks and packaged food. Over the review period, the company paid special focus on improving its brand reputation and the quality of its products to attract consumers and strengthen its position. In 2010, domestic companies continued to account for a leading share of tea retail value sales, while international players had a substantial impact on consumers in relatively new categories, such as instant tea or black standard tea bags. Domestic companies, such as Vinatea and Hoang Long, have experience of processing tea suited to Vietnamese tastes and enjoy strong distribution networks that cover large supermarkets/hypermarkets, as well as small grocery retailers. On the other hand, international manufacturers bring global experience of brand building and marketing. The Lipton brand from Unilever is the most well known foreign brand in tea in Vietnam, with a presence across a number of tea categories. Private label did not play a significant role in tea in Vietnam in 2010, due to the existence of a large number of branded tea products from small to large-scale local and foreign companies.

PROSPECTS
Robust development of smaller tea categories, such as fruit/herbal tea and instant tea, is expected over the forecast period. Consumers are likely to grow more receptive to new products with health benefits in these categories, as well as new flavours, such as lemon, ginger and chrysanthemum. Black standard tea bags is another category with high potential, as these products are convenient to use in public places, such as offices. In Vietnam, tea is considered as a cheaper and healthier alternative to coffee and other beverages. As the economy recovers over the forecast period, higher disposable income levels will allow consumers to purchase more premium tea products, such as those with added ingredients that provide health benefits. On-trade volume sales are expected to see continued strong growth, at a CAGR of 9%, over the forecast period. This performance will be driven by the increasing number of tea specialist shops, and the growing presence of tea in cafs. As people spend more time outside the home for the purposes of socialising and relaxing, on-trade volume sales growth will outpace off-trade volume sales growth over the forecast period. On-trade volume sales are expected to account for a 28% share of total volume sales in 2015, up from 24% in 2010. The average retail unit price of tea is expected to decrease gradually in constant terms over the forecast period, yet with a much slower rate compared to that of review period due to increasing tea quality and the effects of high inflation on production costs. Over the forecast period, the volume of tea produced in accordance with GAP standards is expected to increase due to government initiatives, higher prices and demand for clean tea from abroad. It is planned that Vinatea will serve as a collection point for clean tea from growers. While domestic demand for tea produced in accordance with GAP standards remained limited in 2010, consumers are expected to become more attentive to the safety of tea products in coming years, which will see unit prices increase in line with demand for clean tea. Improvements to the quantity and quality of tea supplied will lead to an increase in tea production over the forecast period. In 2010, only an estimated 40% of the demand for high-quality raw materials from tea factories was satisfied. Price competition is unlikely to occur to a significant degree over the forecast period, as each standard brand has positioned itself in a specific tea category or segment with distinct product features. Well-known brands, such as Hoang Long, Moc Chau, and Thai Nguyen, are expected to maintain the premium positioning of their products.

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Limited marketing activities are expected from domestic brands, as they compete mainly based on the strength of their distribution networks. International players are likely to continue to invest in intensive marketing, including television, newspaper, magazine and online advertisements and PR events.

CATEGORY DATA
Table 1 Fruit/Herbal Tea by Type: % Off-trade Volume 2006-2010

% off-trade volume 2006 Artichoke tea Ginger tea Chrysanthemum tea Others
Source:

2007 44.0 21.0 9.5 25.5

2008 47.0 17.5 10.5 25.0

2009 46.5 17.0 11.0 25.5

2010 46.0 16.0 11.5 26.5

42.0 23.0 9.0 26.0

Official Statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor International estimates

Table 2 Tonnes

Retail Sales of Tea by Category: Volume 2005-2010

2005 Black Tea Fruit/Herbal Tea Green Tea Instant Tea Other Tea Tea
Source:

2006 711.4 942.7 7,312.3 1,352.9 10,319.3

2007 769.7 1,031.0 7,458.6 1,467.9 10,727.2

2008 829.0 1,123.1 7,495.9 1,600.0 11,048.0

2009 888.8 1,218.7 7,420.9 1,736.0 11,264.4

2010 957.2 1,333.4 7,495.1 1,892.3 11,678.0

654.5 866.8 6,898.4 1,252.7 9,672.3

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 3 VND billion

Retail Sales of Tea by Category: Value 2005-2010

2005 Black Tea Fruit/Herbal Tea Green Tea Instant Tea Other Tea Tea
Source:

2006 230.6 355.9 1,834.3 118.4 2,539.2

2007 249.4 391.8 1,889.3 131.0 2,661.6

2008 270.2 429.2 1,908.2 145.7 2,753.2

2009 291.3 469.3 1,898.7 161.0 2,820.3

2010 317.5 516.4 1,936.6 179.5 2,950.0

210.3 324.0 1,682.8 107.6 2,324.7

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 4 % volume growth

Retail Sales of Tea by Category: % Volume Growth 2005-2010

2009/10 Black Tea Fruit/Herbal Tea Green Tea Instant Tea Other Tea Tea 7.7 9.4 1.0 9.0 3.7

2005-10 CAGR 7.9 9.0 1.7 8.6 3.8

2005/10 TOTAL 46.3 53.8 8.7 51.1 20.7

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Source:

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 5

Retail Sales of Tea by Category: % Value Growth 2005-2010

% current value growth 2009/10 Black Tea Fruit/Herbal Tea Green Tea Instant Tea Other Tea Tea
Source:

2005-10 CAGR 8.6 9.8 2.8 10.8 4.9

2005/10 TOTAL 51.0 59.4 15.1 66.8 26.9

9.0 10.0 2.0 11.5 4.6

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 6 % retail value rsp

Tea: Standard Vs Pods 2005-2010

2005 Pods Standard Total

Source:

2006 0.0 100.0 100.0

2007 0.0 100.0 100.0

2008 0.0 100.0 100.0

2009 0.0 100.0 100.0

2010 0.0 100.0 100.0

0.0 100.0 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 7 % retail value rsp Company

Tea Company Shares by Retail Value 2006-2010

2006 43.5 5.7 3.5 1.4 0.5 0.8 1.3 0.4 0.5 0.4 0.1 15.3 26.7 100.0

2007 42.2 6.0 3.5 1.8 0.7 0.9 1.3 0.5 0.2 0.2 0.5 0.2 0.3 0.0 15.9 25.7 100.0

2008 40.5 6.3 3.8 2.3 0.8 1.0 1.3 0.6 0.4 0.3 0.5 0.2 0.2 0.0 15.1 26.5 100.0

2009 39.0 6.5 4.2 2.8 1.0 1.2 1.2 0.7 0.5 0.3 0.4 0.3 0.2 0.0 12.7 29.0 100.0

2010 36.1 13.5 6.5 3.9 3.2 1.4 1.3 1.2 0.8 0.6 0.4 0.4 0.3 0.1 0.0 30.4 100.0

Vinatea - Vietnam National Tea Corp Unilever Vietnam International Co Ltd Ecological Product JSC Hoang Long Tea Co Ltd Vinh Tien Co Ltd Cau Tre Export Goods Processing JSC Herbapol Lublin SA MJF Group Hung Phat Co Ltd Orient Biotech Sdn Bhd Khoi Nguyen Co Ltd Qualitea Ceylon (PVT) Ltd Hopharco JSC Super Coffeemix Mfg Pte Ltd Krger GmbH & Co KG Unilever Vietnam Co Ltd Cau Tre Enterprise Unilever Best Foods & Elida P/S Vietnam Co Ltd Unilever Best Foods Co Ltd Others Total

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Source:

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 8 % retail value rsp Brand Vinatea Lipton Cozy Hoang Long Vinh Tien Cau Tre

Tea Brand Shares by Retail Value 2007-2010

Company Vinatea - Vietnam National Tea Corp Unilever Vietnam International Co Ltd Ecological Product JSC Hoang Long Tea Co Ltd Vinh Tien Co Ltd Cau Tre Export Goods Processing JSC Herbapol Lublin SA MJF Group Hung Phat Co Ltd Orient Biotech Sdn Bhd Khoi Nguyen Co Ltd Qualitea Ceylon (PVT) Ltd Hopharco JSC Super Coffeemix Mfg Pte Ltd Krger GmbH & Co KG Unilever Vietnam Co Ltd Unilever Vietnam Co Ltd Cau Tre Enterprise Unilever Best Foods & Elida P/S Vietnam Co Ltd Unilever Best Foods Co Ltd Unilever Best Foods & Elida P/S Vietnam Co Ltd Unilever Best Foods Co Ltd

2007 42.2 6.0 3.5 1.8 0.7 0.9 1.3 0.5 0.2 0.2 0.5 0.2 0.3 0.0 11.3 4.6 25.7 100.0

2008 40.5 6.3 3.8 2.3 0.8 1.0 1.3 0.6 0.4 0.3 0.5 0.2 0.2 0.0 11.9 3.3 26.5 100.0

2009 39.0 6.5 4.2 2.8 1.0 1.2 1.2 0.7 0.5 0.3 0.4 0.3 0.2 0.0 12.7 29.0 100.0

2010 36.1 13.5 6.5 3.9 3.2 1.4 1.3 1.2 0.8 0.6 0.4 0.4 0.3 0.1 0.0 30.4 100.0

Figura Dilmah Tam Diep Slim Diet Herbal Tea-Lite Thanh Diep Qualitea Vislim Super Krger Lipton Cay Da Cau Tre Cay Da Cay Da Lipton Lipton Others Total
Source:

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 9 Tonnes

Forecast Retail Sales of Tea by Category: Volume 2010-2015

2010 Black Tea Fruit/Herbal Tea Green Tea Instant Tea Other Tea Tea
Source:

2011 1,026.8 1,452.5 7,555.1 2,053.1 12,087.5

2012 1,097.2 1,575.6 7,600.4 2,217.4 12,490.6

2013 1,167.8 1,701.7 7,638.4 2,383.7 12,891.6

2014 1,237.9 1,829.3 7,669.0 2,550.5 13,286.7

2015 1,306.0 1,957.4 7,692.0 2,716.3 13,671.7

957.2 1,333.4 7,495.1 1,892.3 11,678.0

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 10 VND billion

Forecast Retail Sales of Tea by Category: Value 2010-2015

2010 Black Tea 317.5

2011 319.1

2012 323.4

2013 329.9

2014 338.4

2015 349.0

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Fruit/Herbal Tea Green Tea Instant Tea Other Tea Tea

Source:

516.4 1,936.6 179.5 2,950.0

521.6 1,801.1 181.3 2,823.0

537.2 1,711.0 184.9 2,756.5

560.1 1,651.1 190.5 2,731.6

589.6 1,618.1 198.1 2,744.2

625.0 1,601.9 208.0 2,783.9

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 11 % volume growth

Forecast Retail Sales of Tea by Category: % Volume Growth 2010-2015

2014/15 Black Tea Fruit/Herbal Tea Green Tea Instant Tea Other Tea Tea
Source:

2010-15 CAGR 6.4 8.0 0.5 7.5 3.2

2010/15 TOTAL 36.4 46.8 2.6 43.5 17.1

5.5 7.0 0.3 6.5 2.9

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 12

Forecast Retail Sales of Tea by Category: % Value Growth 2010-2015

% constant value growth 2010-15 CAGR Black Tea Fruit/Herbal Tea Green Tea Instant Tea Other Tea Tea
Source:

2010/15 TOTAL 9.9 21.0 -17.3 15.9 -5.6

1.9 3.9 -3.7 3.0 -1.2

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 13 % retail value rsp

Tea: Forecast Standard Vs Pods 2010-2015

2010 Pods Standard Total

Source:

2011 0.0 100.0 100.0

2012 0.0 100.0 100.0

2013 0.0 100.0 100.0

2014 0.0 100.0 100.0

2015 0.0 100.0 100.0

0.0 100.0 100.0

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

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