TCP Group, the maker and distributor of Krating Daeng, Sponsor, Mansome and Puriku drinks, as well as Sun Snacks, vows to double investment in Vietnam to 4 billion baht during 2019-21.
The company established a new subsidiary, TCPVN, in Vietnam and opened its first wholly owned foreign office there in the past four months to look after the group's business in one of Asean's thriving markets.
"The competitive environment and consumer behaviour are rapidly changing in Vietnam, so it is essential and the right time for the company to open an office here," Saravoot Yoovidhya, the group's chief executive, said in Ho Chi Minh City.
The move is part of the company's three-year strategic plan that aims to double the group's sales in Vietnam within three years to 20 billion baht. The combined market share for all TCP Group energy drink brands in Vietnam is expected to increase to more than 50% of the entire energy drink market, up from 42%.
Mr Saravoot said the 4-billion-baht investment in Vietnam will go mainly to marketing and sales promotion, market research, product development and distribution capabilities.
The company also plans to launch at least one more brand to reinforce TCP's leadership in the market for energy drinks in Vietnam.
Mr Saravoot said the opening of the office in Vietnam is part of the five-year plan announced in 2017 to triple the group's total sales to 100 billion baht and is a key element of the group's business reorganisation to bring pride to Thailand on the world stage.
Vassanai Krits-aramruang, director of international business for TCP Group, said TCPVN will accelerate the group's growth in the Vietnam market, which has huge potential.
He attributed his confidence to several factors, including Vietnamese people's preference for energy drinks.
Vietnam also has a culture of hard work and they look for a boost from energy drinks, Mr Vassanai said.
"Vietnam's energy drink market is one of the largest, second only to China's," he said. "The energy drink market in Vietnam is worth about 25 billion baht, larger than Thailand's 23 billion baht. More importantly, Vietnam's energy drink market enjoys average growth of 6% a year, compared with flat growth in Thailand."
TCP Group expanded to Vietnam 30 years ago. The company's products in Vietnam enjoy growth of as high as 25% a year, far outstripping the overall energy drink market's growth.
Mr Saravoot said the Vietnam market is promising because Vietnamese consumers trust TCP Group's products, believe in their high quality and like the premium packaging.
"We've never used price strategy to compete in the market, though the prices of our energy drink products seem to be the most expensive here," he said, adding that this fact gives TCP Group a competitive advantage when it introduces other brands to the Vietnamese market under the group's umbrella.
With fiercer competition from the entry of new energy drink brands in the Vietnam market, Mr Saravoot said the company will place more emphasis on R&D to better understand Vietnamese consumer behaviour and gain insight into consumption habits, lifestyle and preferences to underpin the development of new brands for the Vietnam market.
Five years ago, TCPVN's research found that Vietnamese consumers were seeking an energy drink that they could consume and enjoy as they would a normal carbonated beverage. This was the key insight that led the company to develop its carbonated Warrior energy drink, launched in 2015.
"It was an instant success," Mr Saravoot said. "In only three years, Warrior shot up to become one of the top five most popular energy drinks in Vietnam, and our sales this year will double last year's.
"Competition remains our challenge. We compete with both local brands and international giants, and there are new energy drinks being launched in Vietnam every quarter."
This is why TCPVN has to develop management for the distribution system to increase capability to reach a broader base of consumers nationwide and enlarge its modern trade presence.
"We plan to strengthen our market research capabilities and technology to further enhance the ability of the TCPVN team," Mr Saravoot said. "We aim to be a powerful house of brands, focused on beverage and snacks in the next five years.
"The investments we are making will also let us elevate TCPVN's capabilities to the level of international companies in working with modern trade formats, utilising the most modern technology."
TCP Group expects sales to reach 30 billion baht this year, with about 80% of the total coming from Asia. The company exports energy drinks to 15 countries.
TCP has four factories, one each in Thailand, China, Indonesia and Vietnam.