Who rules Vietnam’s coffee market?

Created 14 April 2018
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 The domestic coffee market in the past was controlled by big players Trung Nguyen, Nestcafe and Vinacafe. But now the competition is stiff, with the presence of many strong brands.

 

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Vietnam is a big coffee exporter

 

 

 

In 2013, the market began heating up with the arrival of Starbucks and other coffee chains, including South Korea’s Coffee Bene, the US’s PJ’s Coffee and Vietnam’s The Coffee House, Trung Nguyen, Highlands, Phuc Long and Passio.

Even enterprises which had never grown and processed coffee jumped on the bandwagon with ambitious business plans.

‘Laymen’ also grow coffee

The Coffee House, a coffee chain brand, in early 2018 unexpectedly announced the purchase of farms, storehouses and roasters to start growing coffee trees in Da Lat.

Owning only 33 hectares of coffee growing area, CEO Nguyen Hai Ninh said he would export coffee in the next five years. He said in the near future his coffee growing area would soar to thousands of hectares.

NutiFood, which has never been in the coffee market, in 2017 announced its investment of VND1 trillion in a coffee cultivation project in Dak Lak province.

The dairy producer also got the nod from Dak Lak provincial authorities to become a strategic shareholder of Phuoc An Coffee, a company with annual coffee export turnover of $12-15 million and 1,400 hectares of coffee area. 

Vietnam has over 150 coffee export companies and 3,000 coffee collectors, but only one-third of enterprises have coffee bean processing factories that make products for export.

This is the first state-owned enterprise in Dak Lak to be equitized.

Starbucks, just after two years in Vietnam, has announced the sale of the Vietnamese ‘Da Lat Blend’ coffee at its 21,500 shops in 56 countries. The premium product is expensive with a 250 gram pack priced at around $12, or 280,000 dong. The coffee is sourced from Da Lat City in Lam Dong province.

According to the Vietnam Coffee and Cocoa Association, Vietnam has over 150 coffee export companies and 3,000 coffee collectors, but only one-third of enterprises have coffee bean processing factories that make products for export.

The battle of the coffee chains

Despite the presence of the US giant Starbucks, Vietnamese coffee chains have been developing rapidly. 

Phuc Long, which attracts youth with its diverse menu and competitive prices, has shops located in advantageous positions in the central area of HCMC.

The Coffee House, however, has not opened shops on so-called ‘golden land plots’, but instead attracts customers with its impressive shop design. The prices are also affordable for middle-class customers.

Highlands is the largest chain with 150 shops in many cities and provinces. Starbucks now has 30 shops, Trung Nguyen, 60; The Coffee House, 80; and Urban Café, 30. And none of them have completed their expansion plans.

 

Source: VietNamNet Bridge

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