Battle heats up among coffee chains in Vietnam

Highlands Coffee has been expanding its chain at a lightening speed, while Trung Nguyen has opened E-Coffee and Cong is exporting products.

battle heats up among coffee chains in vietnam hinh 0
Analysts commented that Vietnam is one of the most attractive coffee markets thanks to the Vietnamese habit of drinking coffee in the morning.

In the past, Vietnam was the land of popular cafes where coffee was sold at less than VND25,000. Now, as the living standards have improved, the requirements for coffee products have become higher.

The battle in the coffee market is among mid-end coffee chains, including Vietnamese Trung Nguyen Legend, The Coffee House, Cong and Phuc Long, and foreign firms Jollibee, Starbucks, Wayne’s Coffee and possibly Café Amazon in the future.

According to CNBC, after six years of presence in Vietnam, Starbucks has opened 40 shops, which means that there is one Starbuck shop for every 1.7 million people. Meanwhile, in Malaysia, there is one Starbuck shop for every 104,982 people and in Thailand, the ratio is 1 per 175,040.

The Vietnamese market is very challenging for foreign coffee chains. The market brought VND108 billion worth of revenue to The Coffee Bean & Tea Leaf, but the brand reported a loss of VND29 billion.

The chain has been taking losses continuously in Vietnam and has incurred the accumulative loss of hundreds of billion of dong over the last 10 years of presence. The chain now has 10 shops instead of 15 as it did in 2018.

Cafebiz commented that foreign brands still cannot prosper in Vietnam because of unreasonable timing. Vietnamese consumers still favor mixed coffee with stronger robusta content than arabica, and they need more time to get familiar with new trends.

Jollibee Foods from the Philippines is the investor that holds the highest number of cafés in Vietnam.

In 2011, it spent $25 million to acquire 49 percent of shares of the business division in Vietnam, and 60 percent of the business division in Hong Kong, from Viet Thai Group, which is the owner of Highlands Coffee.

Also in 2019, Jollibee acquired 80 percent of the shares of the company that owns Coffee Bean & Tea Leaf. It now has 310 shops throughout Vietnam.

As of the end of 2019, the number of Highlands Coffee shops had increased to 299, The Coffee House 160, Trung Nguyen Legend 100, Starbucks 64 and Phuc Long to 60. Meanwhile, Cong and Coffee Bean & Tea Leaf had seen the numbers of shops decreasing from 63 to 61 and 15 to 10, respectively.

Trung Nguyen, which lost the opportunity to develop Trung Nguyen Legend chain because of the divorce lawsuit of the owner Dang Le Nguyen Vu, has decided to launch a new brand E-Coffee.

Vietnamnet

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