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The love and hate relationship of international brands in Vietnam's coffee market.
Source: on.cc
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In Vietnam, people can easily find a variety of coffee shops and coffee carts on the roadside, and also can discover different independent coffee brands. What’s more, there also has a must-visit coffee apartment (The Café Apartment) tourist attraction in Ho Chi Minh City. For Vietnamese people, coffee is not just a drink, but also a means of connecting emotions and relationships. Almost all customers in coffee shops can be seen drinking coffee in groups and sharing their lives with each other.
Overview of stores of international and local brands in Vietnam.
With the rise of the Vietnamese middle class, the value of the Vietnamese coffee and tea drink market has exceeded US$100 million, according to a 2018 report by Euromonitor International. International coffee brands have targeted this large market and entered the Vietnamese coffee market in the early 2010s. However, compared to their ambitious goals when entering the market, the exhibition of international brands in Vietnam has not gone as smoothly as expected.
[Statistics for each global brand up to May 2022, source: official website of each brand]
Although Starbucks was not as fast as local Vietnamese brands in opening stores, it ranked third in terms of revenue, behind Highlands Coffee and The Coffee House. Starbucks continues to cultivate the Vietnamese market. However, the Australian brand Gloria Jean’s Coffees could not sustain its business and chose to withdraw from the Vietnamese market in 2017.
In the past three years, due to the COVID-19 pandemic, many companies have stopped expanding their business to foreign countries. However, Cafe Amazon, a Thai coffee brand, still has strong confidence in the Vietnamese coffee market and started their business in Vietnam at the end of 2020. They are focused on expanding their stores in Ho Chi Minh City, and all stores are adopting large-scale specifications. To respond to market demand, they have added local Vietnamese iced coffee to the menu.
[Statistics for each brand up to May 2022, source: official website of each brand]
Coffee consumption behavior of Vietnamese consumers.
According to "the i-Buzz Asia Cross-Border Industry research report", coffee shops are not only a place for Vietnamese consumers to enjoy coffee and services, but also a place for them to enjoy the environment, especially the place with the decoration of Instagrammable cultural aesthetics. For example, "The Coffee House," which has been popular among young people in recent years, creates a comfortable and modern design space, with a variety of drink options and affordable prices. Established in 2014, The Coffee House has ranked second in terms of revenue in just a few years.
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The coffee house, Danang. Source: Google Map
Fun Fact：Because Koreans really love Cong Coffee, Cong Coffee opened its first oversee store in Seoul.
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Cong Caphe. Source: Cong Caphe FB
Distribution of Vietnamese coffee shops and future trends of international brands.
Let's take Ho Chi Minh City as an example to see the store distribution and future trends of international brands. Compared with the widespread store opening method of local brands, international brands tend to focus on commercial areas, large shopping centers, tourist attractions, etc. District 1 and District 3 of Ho Chi Minh City, a small old town area, gather consulates from various countries, famous landmarks such as the Municipal Theater, the Red Church, high-end clothing stores, high-end restaurants, and international corporate headquarters, etc. This area not only has a large number of white-collar workers but also attracts many foreign tourists, making it a must-win place for international coffee brands. In recent years, the emerging District 2 and Binh Thanh, not far from the main commercial district of District 1, will be planned as the new financial center and high-end residential area of Ho Chi Minh City. International brands see the potential for future development and have already entered the market early.
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"Coffee shops distribution in Ho Chi Minh city" |
"Ho Chi Minh city district names" |
Except for Starbucks, other international chain coffee brands are mainly located in Ho Chi Minh City and Hanoi, and have not yet entered other cities. The most conservative way for international coffee brands to enter foreign markets is to prioritize entering the largest economy city or the capital to ensure sufficient crowds, establish brand awareness, and test market acceptance. However, commercial areas also move with urban planning, and how to open stores in old and new redeveloped areas tests the response capabilities of international brands.
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