Starbucks to open first outlet in Vietnam in early February

Starbucks Corp said it will set up its first outlet in Vietnam early next month as the U.S. chain continues to expand in fast-growing Asian markets.

Starbucks said it will partner with Hong Kong's Maxim's Group to open its first store in Ho Chi Minh City and reiterated that Asia continues to be a significant growth driver for the company.
"Vietnam is one of the most dynamic and exciting markets in the world and we are proud to add Vietnam as the 12th market across the China and Asia-Pacific region," said John Culver, president, Starbucks China and Asia Pacific.

Starbucks already buys some of the highest-quality arabica coffee from Vietnam and said it is committed to sourcing more from the region in the long-run.
Vietnam is the second-biggest coffee producer in the world after Brazil.

Starbucks operates more than 3,300 stores across 11 countries in the China and Asia-Pacific region.

Through its licensed partner, Coffee Concepts (Hong Kong) Ltd, a unit of Hong Kong's Maxim's Group, Starbucks operates more than 130 stores in Hong Kong and Macau. Last year, Starbucks opened its first store in India.

Jan 3, 2013- Reuters

Coca-Cola Vietnam protests tax evasion accusation

  

 

A man is pictured carrying a Coca-Cola 24-bottle case in Ho Chi Minh City

Photo: Tuoi Tre

With Coca-Cola Vietnam recently coming under scrutiny over tax evasion possibilities, its External Relations Director said the company’s continuous losses is a result of a series of objective causes.

Coca-Cola Vietnam, the country’s leading soft drink manufacturer with steadily increasing sales, has never posted profits since its arrival in Vietnam in 1994.
Coca-Cola’s cumulative losses in Vietnam are now some US$180.6 million, even bigger than its equity of $141.6 million, according to Ho Chi Minh City Department of Taxation.

Despite the steep losses, the company, currently running three manufacturing plants in HCMC, Da Nang, and Hanoi, has still continued to expand its Vietnam operation, with its chairman cum CEO Muhtar Kent claiming during his Vietnam trip last October that Coca-Cola will pour an additional $300 million into the country in the next three years.

Coca-Cola Vietnam, meanwhile, attributed the losses to objective causes, and a number of other subjective ones.

Soaring expenses

“A myriad of unwanted reasons have sent Coca-Cola Vietnam to the repeated loss status,” said External Relations Director Nguyen Khoa My in an interview via email with Tuoi Tre.

With the arrival of new competitors, Coca-Cola Vietnam has suffered reductions in its market share, and thus having to earmark a huge amount of capital for PR and marketing to protect its brand, Khoa said.

“The rising input costs, such as raw materials, power, and sugar, have also increased our products’ cost prices,” he added.

Khoa also said that the company had also hiked salaries for its employees by at least 11 percent on an annual basis.

“It’s to help the employees combat inflation,” he explained.

As for the subjective causes, Khoa said it is because of the pressures from bank loan interests and the foreign exchange rate risks for the loans in US dollars.

However, Le Duy Minh, head of the tax inspection of the city’s tax agency, said most of the company’s loans are from its parent company.

“The short-term debt Coca-Cola Vietnam owes to its parent company is as much as VND2.02 trillion, while loans from other sources only account for VND343 billion,” Minh elaborated.

“Hence, the debt status of Coca-Cola Vietnam is in fact not a debt, as the money is provided by its parent company, which is in fact part of the profits the Vietnam firm annually sends back to the parent under the disguise of raw material payment.”
 
Expanding means believing

Asked about the suspicion that Coca-Cola Vietnam is engaged in transfer pricing activities, Khoa asserted that the company has been strictly following Vietnamese tax and financial laws.

“These have been proven in the audit reports over the last years,” he said.

In addressing the question why the company still expanded its operation despite the steep losses, Khoa said it is for the company to realize its future vision.

“Vietnam is an important market in the Asia – Pacific under our development vision to 2020.

“The new financial investment in the country is not merely meant to expand operation, but also to show our faith in the long-term development potential in Vietnam,” he asserted.

Source: Tuoi Tre on December 8, 2012

Drink makers vie for market share

An employee of Tan Hiep Phat Co bottles beverages. — VNA/VNS Photo Chi Tuong

 HCM CITY (VNS)— The beverage market continues to be a highly promising market, reflected by the increase in the number of recent investments from major domestic and foreign enterprises.

According to market research company Nielsen Viet Nam, the local beverage industry recorded a growth rate of 17 per cent last year, despite difficult economic times that caused many other kinds of companies to struggle.

Tran Quy Thanh, chairman of Tan Hiep Phat Beverage Group, said Viet Nam's annual per capita consumption of soft drinks rose sharply in recent years, from three litres in 2007 to 23 litres at present.

However, consumption in the country remains half that of the Philippines.

With rising income levels, Vietnamese are spending more on food and drinks, Thanh told Thoi Bao Kinh Doanh (Business Times) newspaper.

"This means that the market still has big room for companies to develop," he added.

Muhtar A. Kent, chairman and CEO of the Coca Cola Company, said that soft-drink consumption in Viet Nam was about a quarter of the global average.

He said that beverage companies were jumping into the market because per-capita purchasing power had risen to about US$3,500 per year and the middle class was continuing to grow at a fairly fast rate.

Viet Nam remains an attractive market for the beverage industry, with PepsiCo holding a firm foothold in fast-food and beverage areas, according to Umran Beba, president of Pepsico's Asia Pacific Region.

Both foreign and local enterprises have developed new strategies to grab more market share.

The Tan Hiep Phat Beverage Group, for instance, is investing VND4 trillion ($192.12 million) to build two new plants in Quang Nam and Ha Nam provinces.

Coca Cola also plans to invest an additional $300 million in the Vietnamese soft drink market by 2015.

In addition, PepsiCo Viet Nam has agreed to form a joint venture with Japan's Suntory Holding Ltd under which Suntory would buy a 51 per cent stake in PepsiCo's Vietnamese beverage business.

The deal is an important part of PepsiCo's long-term strategy in Viet Nam.

Fierce competition

Coca Cola and PepsiCo still hold the largest share of the Vietnamese beverage market, totalling about 60 per cent.

In 2009, Coca Cola pumped an additional $200 million into Viet Nam, while PepsiCo, not wanting to play second fiddle to its rival, injected $250 million.

With its recent investment of $300 million, Coca Cola will be able to improve the effectiveness of its three plants that operate in Viet Nam, and further develop its brand names and expand its retail system.

For PepsiCo, its joint venture with Suntory is expected to enable it to enhance its already well-known brand name and expand its influence in the Asian market.

Since it is impossible to compete with foreign giants Coca Cola and PepsiCo in the carbonated drink market, domestic beverage companies have chosen to focus on non-carbonated drink products.

Vietnamese consumers prefer non-carbonated water and drinks such as Tan Hiep Phat, Vinasoy, Vinh Hao and Sapuwa.

In the first six months of this year, turnover for many kinds of non-carbonated drinks rose sharply, including energy drinks (up 27 per cent), green tea and bottled water (up 23 per cent).

Tan Hiep Phat is one of the biggest producers of non-carbonated drinks. It holds a 53 per cent market share for bottled water and herbal tea drinks, according to London-based Euromonitor International Ltd, which provides market-research and business-intelligence reports and data.

The company has invested in two new plants that will continue to produce 40 kinds of products and will also introduce several new products, including beer, wine, noodles, spaghetti and instant food. 

Source: VNS

Carlsberg to increase minority stake in Habeco

HA NOI (VNS)— The Ministry of Industry and Trade has asked the Ha Noi Beer Alcohol & Beverage Joint Stock Co (Habeco) to sell an additional 13-per-cent stake in the company to foreign strategic partner Carlsberg Breweries A/S. Carlsberg already owns 17.2 per cent of the local brewer, and has been a stakeholder in the company since 2008.

Under the proposed deal valued at a total of over VND1.5 trillion ($72.4 million), Carlsberg would buy around 30 million additional shares at VND50,015 per share, the publication Dau Tu (Vietnam Investment Review) reported. Habeco, which has 231.8 million shares outstanding, posted a net profit of VND237 billion ($11.2 million) in the first half of this year, a decline of 5.4 per cent from the same period a year ago.

Source: VNS

Pepsi, Suntory to form local alliance

Beverage company PepsiCo Vietnam and Japan's Suntory Holdings Limited announced an agreement to form a strategic alliance earlier this week. 

Under the terms of the agreement, Suntory will acquire a 51 per cent stake in PepsiCo Vietnam's beverage business, with PepsiCo keeping control of the other 49 percent. Both companies will hold key roles in the management team of the new joint venture, which will serve as the producer of drinks for both companies in Vietnam.

The new alliance is expected to build on PepsiCo's existing position in Vietnam and to create new growth opportunities for both partners in the market. 

PepsiCo will retain marketing and innovation responsibilities for its portfolio of iconic beverages in Vietnam, including the brands Pepsi-Cola, 7-UP, Sting, Mirinda, Tropicana Twister, Lipton and Aquafina. Suntory in turn has committed to sharing its strong brand and long history of successfully developing beverages for the Asian market. 

This transaction is subject to the completion of legal processes. 

Since entering the market in 1994, PepsiCo has undertaken an investment programme of more than 500 million USD and now has five beverage manufacturing plants in Vietnam. The country is a high priority market in PepsiCo's aggressive emerging and developing market growth plans.-VNA

Source: Vietnamplus

Coca-Cola steps up investment in Vietnam

The Coca-Cola Co. and its bottlers say they're more than doubling their investment Vietnam over the next few years, as the world's biggest beverage maker intensifies its push to capitalize on emerging markets.

The Atlanta-based company, which makes Minute Maid, Sprite, Fanta and Dasani, said Friday that it will invest an additional $300 million in Vietnam over the next three years. That brings its total investment in the country to $500 million between 2010 and 2015.

As soda consumption has flagged back in the U.S., Coca-Cola and PepsiCo Inc. are increasingly looking to expand in countries where the ranks of customers with more disposable income are growing. During its third quarter, for example, Coca-Cola said its sales volume in India rose 15 percent, while North America sales volume rose just 2 percent.

Globally, Coca-Cola's market share of carbonated soft drinks is 52 percent, compared with 21 percent for PepsiCo, according to the industry tracker Beverage Digest.

This summer, Coca-Cola also said it plans to its step up its investment in India to $5 billion over the next eight years. That's more than double the amount it invested in the country since re-entering the market in 1993. In China, the company plans to invest $4 billion over the next three years.

Coca-Cola opened its first bottling plant in Vietnam in 1960, then left the market in 1975 when foreign diplomats and citizens were forced to leave just months before the U.S. government enacted a trade embargo. The company re-entered the market in 1994 after President Bill Clinton announced the renewal of diplomatic relations, with products initially being shipped from Cambodia. A factory was later built outside of Hanoi.

In addition to its stable of more well-known brands, one of Coca-Cola's most popular drinks in the country is Samurai, a carbonated energy drink with vitamins that comes in fruity flavors. Another is Minute Maid Nutriboost, a dairy and orange juice drink targeted at young adults.

Source: Stockbiz