Beverage sector needs to strategise

Hanoi (VNA) - Local beverage enterprises should have reasonable strategies on production and consumption to gain growth in the situation of high inventory at present, said experts.

According to the Ministry of Industry and Trade's report in October, the inventory index of the beverage industry in the first 10 months of this year increased by 97.4 percent compared with the same period last year. It was always among the top industries with the highest inventory index in the last two years.

Meanwhile, the beverage industry also had a high production index, even higher than the average production index for the processing industry.

The General Statistics Office reported that in the first 10 months of this year, the production index of the local beverage industry gained a year-on-year increase of 7.1 percent, including milk powder, which went up 17.9 percent, fresh milk, which rose 15.3 percent, and beer that rose 6.8 percent, in addition to commercial water, which increased 6.6 percent.

However, the consumption index of the beverage industry had a year-on-year surge of only 5 percent in this period.

The local beverage firms have faced difficulties in production and business as well as competition from rival foreign rival firms. In addition, slow growth of the local economy has been a reason for slow consumption of beverage products in the past.

Nguyen Van Viet, Chairman of Vietnam Beer, Alcohol and Beverage Association, said early this year that Vietnamese beverage firms must be ready to face strong competition from foreign rival because foreign enterprises have had strong investments in Vietnam.

The association said the growth rate of the beer industry has seen a downtrend since 2011. It is expected to reduce to 4.7 percent for this year from 8.5 percent in 2011. The HCM City Food and Foodstuff Association said the beverage industry has faced those difficulties due to the instability in purchasing material, high transport costs and property rents, and lower purchasing power in the local market.

However, experts said the local beverage industry will gain recovery in growth if it overcomes the existing difficulties.

Bui Truong Thang, Deputy Head of the Light Industry Department under the Ministry of Industry and Trade, said that in the future, those enterprises should focus on expanding the market and synchronising production equipment to improve capacity and quality and reduce production cost. These will lead to increased competitive ability of beverage products of local firms.

The SSI Research under the Saigon Securities Inc (SSI) said the consumption of beverage products has seen a saturation in cities in recent times, but the rural regions have become potential markets that the enterprises have not focussed on developing, Thoi bao Kinh doanh newspaper reported.-VNA