Vietnam Time

12/10/2018 2:41:35 PM

Coffee chains, both domestic and foreign, prosper in Vietnam

Starbucks Vietnam continues to make a profit though its network has expanded slowly and its prices remain high.

Domestic names, from startups such as Cong Ca Phe and The Coffee House to the more established Phuc Long, Highlands and Trung Nguyen, are also doing well.

Highlands leads the market in number of shops, with 233 shops nationwide, or 100 shops more than the second largest chain, The Coffee House.

Other chains such as Starbucks, Trung Nguyen Legend, Phuc Long and Cong Ca Phe have 40-60 shops each.

In 2013, when Starbucks, a big rival in the same market segment, joined the Vietnamese market, The Coffee Bean had 11 shops. After five years, the number of shops has increased to 15, while Starbucks now has 40.

The number of shops will increase further as investors are gathering strength to increase their coverage.

Most of the best known coffee chains are Vietnamese owned, except two foreign brands – The Coffee Bean & Tea Leaf and Starbucks.

The former has been in Vietnam for over 10 years. In 2013, when Starbucks, a big rival in the same market segment, joined the Vietnamese market, The Coffee Bean had 11 shops. After five years, the number of shops has increased to 15, while Starbucks now has 40.

At that time, Dang Le Nguyen Vu, the owner of Vietnamese Trung Nguyen coffee brand, made derogatory remarks about Starbucks coffee.

In an interview with foreign press, Vu said Starbucks was not selling coffee, but ‘coffee-flavored water with sugar’.

Starbucks’ opening of 40 shops within five years, in analysts’ eyes, reflects its slow network expansion. The chain will only open shops in advantageous positions, including near office buildings with.

However, analysts say that Starbucks has taken ‘slow but firm steps’ in Vietnam. The coffee brand from the US is leading the high-end market segment.

Having selling prices nearly equal to Starbucks, Trung Nguyen Legend, however, is not considered to be on the same level as Starbucks.

In the mid-end market segment, there are many ambitious names – Highlands, The Coffee House and Phuc Long.

In 2017, Coffee Concepts which runs Starbucks Vietnam network, reported revenue of VND449 billion, or 50 percent higher than 2016, and double that in 2015, a satisfactory result if compared with the slow expansion of the network.

While Highlands began making profit after nearly 10 years, Starbucks only took a loss in the first three years, totaling VND52 billion, and began making profit in 2016.

Starbucks’ revenue in 2017 was equal to one-third of Highlands, but higher than Phuc Long and The Coffee House, which had VND340 billion each.

US$1=VND22,000

VNF/Vietnamnet  
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