crafting and executing strategy for fizzie beverage in vietnam and chile market

Company name: FIZZIE BEVERAGE CO .Ltd The company was established in 2021 in Vietnam, which is a start-up company in the carbonated drink industry.. Bring benefits and refreshment for ev

NATIONAL ECONOMICS UNIVERSITY

SCHOOL OF ADVANCED EDUCATION PROGRAMS

Lê Tố Uyên

Tô Minh Loan

Lê Minh Khuê

Vũ Thị Thu Uyên Nguyễn Thị Trang

Class: IBA 60A Supervisor: PhD Nguyễn Anh Minh

Ha Noi, October 12, 2021

CONTENTS

PART A 3

I OUR COMPANY AND PRODUCT 3

1 Our company 3

2 Our products 4

II THE INDUSTRY’S ENVIRONMENT 6

1 Macro Environment in Vietnam 6

1.1 Political factor 6

1.2 Economic factor 6

1.3 Social factor 6

1.4 Technological factor 6

1.5 Environmental factor 6

1.6 Legal factor 6

2 Industry’s Environment in Vietnam - Five forces analysis 7

2.1 Suppliers 7

2.2 Substitute products 8

2.3 Rival firm 10

2.4 New entrants… 10

2.5 Customer… 11

III COMPETITIVE STRATEGY 11

1 About the Best Cost strategy 11

2 Reasons to use Best Cost strategy 12

2.1 Buyer diversity 12

2.2 Positioning advantage 12

2.3 Resources and capabilities… 12

PART B 14

I GLOBAL STANDARDIZATION STRATEGY… 14

II MARKET OVERVIEW 14

1 PEST… 14

1.1 Political 14

1.2 Economic 15

1.3 Socio-cultural 15

1.4 Technological 15

1.5 Beverage market in Chile 15

2 SWOT Analysis… 16

2.1 External Opportunities 17

2.1.1 Chilean demand for healthy food increases 17

2.1.2 Modern transportation infrastructure 17

2.1.3 High income economy 17

2.1.4 Young population 17

2.2 External Threats 18

2.2.1 Competition from rivals 18

2.2.2 Chile implements the New Food Law 18

2.2.3 Demand for clean label products 18

III ENTRY STRATEGY TO EMPLOY 19

PART C 21

FROZEN FRUIT………… 21

1 Buying in bulk and saving money 21

2 Business’s scale 21

3 Customers’ tastes 21

REFERENCES 22

PART A

I OUR COMPANY AND PRODUCT

1 Our company

Company name: FIZZIE BEVERAGE CO Ltd

The company was established in 2021 in Vietnam, which is a start-up company in the carbonated drink industry

We are the original company focusing on renewing carbonated fruit drinks to be delicious and good for health in Vietnam

Our company’s strategic vision is “To provide consumers worldwide affordable drinks, convenient, delicious, good for health Bring benefits and refreshment for everyone who is served”

The mission statement of our company:

● Building the position of Fizzie Beverage in the Vietnam market, making roots to grow in the international market

● Creative and serving customer health, consumption needs, minimizing environmental impacts

● Respect customers, diversify products to serve each customer object

Besides being convenient with many different designs, cans and various capacities suitable for many customers

Along with the development of a wide distribution system, customers can get products in a convenient way

Store location : Wide distribution of branches: wholesale and other distributors, catering services, grocery stores, convenient shops, large retailers, and e-commerce retailers

products that customers purchase

Profit margin Profitability depends on the number of products sold

to cover the cost and provide attractive profits.

Production technology : Aseptic

The advantages of Fizzie :

● Products are made from pure fruit juice, have delicious and attractive, natural flavors

● Fizzie beverages contain many essential vitamins for the body to provide energy for the body in a long day of activity

● In addition, with modern production technology, ASEPTIC technology creates a completely superior product compared to other technology, ensuring strict requirements for food safety and do not lose the nutrients that are healthy by the impact of high temperature, and keep the most natural flavor

o Raw materials before being put into nutrient extraction will be strictly controlled for quality

o The water used in the extraction must meet the standards of the Ministry of Health

o The extraction process is strictly controlled in terms of temperature and time to optimize all nutrients beneficial to health The product is sterilized through the UHT system at 140 degrees Celsius for 30 seconds and lowered cooling temperature at 25 degrees Celsius to help the product have the highest purity while maintaining the nutritional value

o After filling and capping, the product will go through an electronic camera system to identify and eliminate bottles with warping errors during the capping process The last step is automatic product labeling and packaging

II THE INDUSTRY’S ENVIRONMENT

1 Macro Environment in Vietnam - PESTLE Analysis

1.1.Political factor

● Political stability, no risk of military invasion => Economic stability.

● The Government is quite supportive toward the Soft Drink industry

● Intellectual property protection

World Health Organization (WHO) experts have expressed strong support for a new tax on sugary drinks proposed by the Ministry of Finance The proposal will impose a

10 percent special consumption tax on different types of beverages, including sweetened drinks The new 10 percent special consumption tax would also accrue to other beverages, including carbonated or non-carbonated soft drinks, juices, flavored water, energy drinks, instant tea, pre-packed coffee and flavored milk

1.2 Economic factor

● Developing country with stable economic growth

● GDP growth is at 2.6% per year, for particular 2.91% in 2020

● Low inflation (2.7%)

The Vietnamese economy is likely to gradually recover from the fourth quarter of

2021 and escape the minus growth seen in the third quarter thanks to the activeness of the business community and the Government’s efforts to remove obstacles facing enterprises

The fourth resurgence of COVID-19 in several northern industrial hubs such as Bac Ninh and Bac Giang, and later in southern localities including Ho Chi Minh City, BinhDuong and Dong Nai, as well as the capital city of Hanoi in the third quarter has caused numerous difficulties to the business sector which generates 60 percent of the country’s GDP

Meanwhile, 80 percent of businesses involved in the survey said that they saw rises in input cost, 54.2 percent pointed to increases in material prices, 49.5 percent

complained about higher logistics cost, 33 percent encountered a worker shortage, and40.8 percent faced a lack of materials for production

The consumption of healthy food has been arising trendfor several years now, as seen in the "clean-eating" drive in western European countries and America; as also macrobiotic diets in Asian countries But the Covid-19 pandemic has provided added impetus For many, it has been a wake-up call to adopt a healthy lifestyle and consumehealthy products.

Researching post Covid-19 consumer behavior, a survey conducted by Nielsen Vietnam shows a sharp increase in demand for products that boost health and immune system Even after society returned to a more or less normal life, people still have shown increased attention to health issues, thereby generating a major change in the consumption of food, beverage and fast moving consumer goods

Among items that have seen robust consumption recently, consumers are prioritizing healthy food along with essential items There is a stronger focus on measures to boostthe immune system and maintain health, including fresh foods, healthy foods and drinks with immune boosting ingredients

1.4 Technological factor

● The domestic technology in the drink industry is not advanced

● Outdated technology makes it impossible to optimize the product production line, it costs money to import foreign technology

Experts said that the abundant supply of farm produce, a young population, and increasing demand could help Vietnam grow into one of the largest fast moving consumer goods (FMCG) markets in the region This also poses a good opportunity for producers to develop brands for their products and increase the application of technological advances into producing and diversifying products, thus helping to win both domestic and foreign users

For instance, Tan Hiep Phat’s VND4 trillion ($173 million) new plant is situated on anarea of 40 hectares (99 acres) in the Mekong Delta province of Hau Giang Its construction is being done in three phases The first phase, with an Aseptic filling line,has begun operation with a capacity of 48,000 bottles per hour or 130 million liters a year

With the Aseptic, closed-loop production system, THP produces nature-based beverages including Dr.Thanh Herbal Tea, Zero Degree Green Tea with Lemon, Number 1 Energy Drink and Zero Degree Macchiato MilkTea They are produced in completely sterile conditions and with no preservatives or artificial coloring

The Hau Giang plant is the first in Vietnam to use the Aseptic production technology for cup filling and sealing lines Instead of filling and capping only PET bottles, THP’s investment in Aseptic technology for cup filling and sealing lines aims to increase the convenience factor of their products This technology can be used for various drinks including Zero Degree Macchiato Milk Tea, milk coffee and corn milk.

1.6 Legal factor

● The legal system is relatively good

● Have Copyright, patents / Intellectual property law

● Consumer protection

● Employment law

1.7 Beverage market in Vietnam

Vietnam is a very potential food and beverage (F&B) market, according to the Business Monitor International(BMI) F&B categories currently account for the highest proportion of consumers’ monthly spending, about 35 percent F&B spending

is equivalent to about 15 percent of the country’s GDP and the figure is on the rise.Like many other countries, Vietnam is seeing an upward trend in consumption of soft drinks In 2000, its consumption of soft drinks per capita stood at six liters, but climbed to 44 liters in 2016

In terms of ready-to-drink tea products, the market research company Euromonitor reported that Vietnamese people annually consume more than two billion liters.Most market research has a joint stance that Vietnamese consumers are willing to pay more for higher-end drinks, increasingly prefer trusted brands and healthy products, and value convenience

Five most popular non-alcoholic beverage makers in Vietnam saw last year’s revenues

rise 13 percent year-on-year to over $1.7 billion.

Suntory PepsiCo, a venture between the U.S.’s PepsiCo and Japan’s Suntory HoldingsLtd, continued to lead the market with revenues of VND 18.3 trillion ($793 million),

up 14 percent year-on-year The company offers a variety of products including soft drinks, water, energy drinks and Oolong tea Coca-Cola followed with VND 9.3

trillion, its product range also comprising soft drinks, water and energy drinks

Vietnamese company Tan Hiep Phat Group (THP) came in third at VND 9.2 trillion,

up 10 percent, focusing only on two types of drink: tea and energy drink The fourth and fifth places were taken by Vietnamese firm Masan Consumer and Thai company Red Bull, both having recorded growth in recent years

2 SWOT Analysis

Internal Strengths

1 Healthy product line

2 Excellent customer service &

modern production technology

3 Known for ethical business

4 Advertising

Internal WeaknessWeak brand image & reputation in domestic market

External Opportunities

1 Vietnamese demand for

healthy food increases

2 Provide excellent delivery service ( S2, O2)

W.OAdvertising the product frequently about the special characteristic, using the ad to enhance the company’s image

3 Put a lot of effort in developing new products to attract customers ( S1,T2)

W.TInvest in brand image and packaging to compete and meet the new demand of consumers

3 Five forces analysis

3.1 Suppliers

Being a start-up company, we are not able to establish a fruit farm large enough to meet our demand; as a result, we need to purchase fruits from the fruit suppliers in the market

Our fruit suppliers requirements are:

● Assurance of high-quality GlobalGAP fruits

● Ability to process different types of fruits

● Always available a large quantity of fruits

Our main fruit suppliers are Lam Tien Agricultural Services And Trade Cooperative, SUNRISE INS Company Limited and Da Lat Natural Food Joint Stock Company These suppliers have experience in processing different types of fruits Their process begins from planting fruits to preserve them to export, which are appraised by a competent authority The fruits provided by these suppliers have high quality and meetthe GlobalGAP standard Their fruits have an attractive price when compared with other suppliers

The small number of available GlobalGAP fruit suppliers in Vietnam, leads to many difficulties in finding a stable fruit supplying source In some cases, the suppliers’ products are in short supply

Our demand for supplier fruit is high because the quality of fruit supplied affects directly the quality of the products The company wants to manufacture healthy carbonated soft drinks so the requirements of suppliers are high Furthermore, the suppliers are concentrated in selling to the large companies, who have cooperated withthem in the long term

=> The bargaining power of suppliers is strong.

3.2 Substitute products

Soft drinks are the appropriate substitute products Soft drinks are convenient for the customer because they are small, refreshing, and flavorful This product exists in the

market for the long term; as a result, many people know about and use it The price of

a soft drink is low because of the low cost to manufacture

Non-alcoholic beverage producers in Vietnam have reported impressive growth thanks

to the large space for development, which is the basis for both foreign and domestic players’ long-term investment commitment

Foreign carbonated soft drinks:

● The most famous soft drink brands in Vietnam are mostly foreigners’ , such as Red Bull, Coca-Cola, Sprite, Fanta, These products are well-known not only

in Vietnam but also worldwide

● These brands have existed in the market for a very long time so they can affirmtheir products’ quality

● Due to mass production, the price is pretty cheap, around 10.000 - 20.000 vnd per 330ml can The quality of products has been tested carefully before selling

to the customer Their flavors are signature and easily recognized anywhere.Domestic carbonated soft drinks:

● The Vietnamese also have some soft drink brands that gain their reputation nationally For example, NumberOne, Wonderfarm, These brands usually contain less gas, lighter flavor and also have cheaper prices, around 6.000 -

8.000 vnd per 310ml can or 330ml bottle.

● Although these domestic brands have difficulties competing with the foreign big guys in the cities, they can survive in the rural areas thanks to their amazingly cheap prices and wide range of flavors

=> High availability of substitute products

3.3 Rival firm

The four biggest names in Vietnam’s sweetened beverage market include the US’ Coca-Cola Vietnam, Suntory PepsiCo (a fully foreign-owned joint venture between

PepsiCo and Japan’s Suntory Holdings Limited), URC Vietnam from the Philippines, and Vietnam’s Tan Hiep Phat – all of which have grand designs in Vietnam.

Their products are used by millions of Vietnamese and favored for their cheap price (only about 8.000 - 20.000 vnd per product ) and refreshing flavors However, since their products contain some artificial chemicals that might have bad effects on people’s health, a lot of consumers have decided to use other products which are more

‘natural’ and healthier

=> High rivalry intensity among competitors in domestic soft drink market

3.4 New entrants

Since there aren't any formulas for others to imitate exactly the flavors of any specific brands, there are high chances that the firms can maintain their signature features.However, others can easily create their own formulas That is the reason why there aresuch a wide range of flavors in the market nowadays And unfortunately, this situation tends to go on for a long-term in the future

=> The threat from potential entrants is high.

3.5 Customer

The target customers are students, office workers who always work and study for 6-8 hours a day and need something to temporarily refresh after a hard-working day Another group of target customers is the families who want to hold a gathering and worry about getting drunk after that Instead, they prefer soft drinks because they are not only alcohol-free but also able to make them feel more comfortable after being toofull

The number of customers demanding these products are increasing, partly because of the young population However, the loyalty of the consumer is not high, since these products have existed in the market for a very long time and the customers are always keen on trying new things

Since there are many articles about the disadvantages of having soft drinks, many people are now more into finding new types of drinks that are refreshing like fruit juice but also can restore for a relatively long time

=> The high demand for this product.

Conclusion: Based on all the analysis above, including the PESTLE, SWOT and Five

Forces, although both the rivalry among competitors and availability of substitute products are high, we still consider Vietnam soft drink market as a very potential