Scandals shake up drinks sector
Scandals shake up drinks sector
The beverage market has seen significant upheavals recently as big players like Number 1 Group and Suntory PepsiCo face scandals over their production quality. The latest shock to local consumers was last week’s allegations of high lead content in the green tea product C2 and energy drink Red Dragon, produced by the Universal Robina Corporation. Nguyen Van Viet, chairman of the Vietnam Beer, Alcohol Beverage Association, shared his analysis on this unfolding issue with VIR’s Thanh Xuan.
Besides the Philippine-backed Universal Robina Corporation (URC), many other beverage producers have faced scandals relating to production quality, like Vietnamese firm Number 1 with the “fly in the bottle” incident, and Suntory PepsiCo facing problems over the input materials in its Oolong Teaplus products. Should consumers be wary of beverage quality?
To be precise, technical risk is the root of the problem. In 2015 alone, there were 4.37 billion litres of soft drinks consumed. The figure is equivalent to over 13 billion bottles of a 330 millilitre serving. With such a huge volume of production, no beverage maker can 100 per cent guarantee every product meets the quality requirements.
Although the high lead content allegation of URC’s products is very serious and merits investigation by the relevant authorities, it’s possible that just a tiny sample of the products do not meet requirements. Consumers should not believe all products are unsafe or of low quality.
While technical risks deserve some sympathy from consumers, many reacted angrily towards the producers, calling for the boycotting of the companies involved. Interestingly, URC’s allegations of high lead content and bribery were sparked by rumours circulated widely on social networks. Is there any chance that these scandals were triggered and driven by their competitors?
There were many developments which contributed to the response from consumers in the aforementioned scandals, with social media playing a significant role.
With respect to the allegations concerning the actions of competitors, I think that fierce competition is unavoidable in a fast-growing market like Vietnam. Tropical weather, diverse cuisine trends, and the growth of fast-food services are paving the way for the local soft drink industry’s development. With this in mind, it is crucial for enterprises to maintain their business culture and ethics.
Research shows that consumers’ preferences are moving towards healthier drinks which will set higher standards for beverage production. How has this trend affected drinks producers?
There has been a distinct shift by consumers who are demanding more nutritious content in drinks. As a direct consequence we have seen a move towards products such as green tea, juice, vitamin drinks, herbal teas with less or no sugar, and mineral waters.
Consumers’ new health-consciousness has pioneered the introduction of new products, for instance, Tan Hiep Phat Group launched Zero Degree Lingzhi Oolong Tea in 2015, taking advantage of the health benefits of lingzhi to target health-conscious consumers, especially the old. Vinacafe Bien Hoa also launched WakeUp Green Tea 247, infusing its product with green tea to minimise consumers’ negative perceptions of energy drinks.
Green tea products, which are renowned for their various health benefits, accounted for up to 37.6 per cent of the overall market share last year, according to the VietinBank Security Company.
Consumer demand will always direct the future course of business. Producers will have to centre on nutritious products and focus on their quality in the future.
Will Vietnam’s integration in the ASEAN Economic Community or the upcoming Trans-Pacific Partnership put pressure on the quality standard of local beverage producers?
It certainly will. Local firms will face cut-throat competition from overseas beverage suppliers due to the increased availability of alternative goods. Pressure can come from the quality of products supplied and customer care services.
Therefore, it is a must for enterprises to ensure their products’ quality in all cases, eliminating technical risks, effectively building brand names, and looking after their existing customers. The support of Vietnamese consumers is critical to the sustainability of any producers amid fierce competition.
