Starbucks, coffee brands, local consumers

Starbucks revenues in Vietnam exceed target

The Starbucks Corporation, one of the world’s leading coffee brands, has claimed initial success in Vietnam.

Starbucks, coffee brands, local consumers

Starbucks CEO Howard Schultz says revenues from the company’s first Vietnamese outlet have surpassed expectations, although it has experienced a number of challenges to attract local consumers.

The Wall Street Journal said  Vietnam- known for its nerve-jangling strong coffee, often sweetened with condensed milk-has its own deep-rooted coffee culture that could prove challenging to the Seattle-based coffee chain.

Since its two-story store opened in Ho Chi Minh City in February, Starbucks’ sales at the new location are exceeding predictions, according to Howard Schultz, who did not provide specific sales figures.

The company decorated its downtown store with local art and artifacts to create a distinctly Vietnamese atmosphere. It also came up with a new drink, the Asian Dolce Latte, to appeal to local palates and it serves roast-duck wraps and French-style baguettes.

But some say the chain could still do more. Nguyen Van Minh Khanh, 24, said Starbucks should use drip filters perched on top of glass mugs, the way the Vietnamese do.

“If Starbucks wants to succeed in Vietnam, they have to change the way they serve,” he said.

Local coffee entrepreneurs, such as Trung Nguyen (Central Highland) coffee brand CEO Dang Le Nguyen Vu, seem confident that local drinkers will stick with Vietnamese coffee, which is available everywhere from nearly 1,000 Trung Nguyen brand outlets, as well as glamorous cafes and small pavement shops.

However, Schultz said Starbucks sells more than just coffee. “The environment that we create, the store design, the experience…they all add up to occupy a much different position than anything anyone else in Vietnam,” he elaborated.

Starbucks has managed to penetrate many demanding markets since it opened its first overseas store in Japan in 1996. The move into Vietnam reflects its continuing efforts to venture into far-flung regions while core markets such as the US and Europe remain relatively weak.

Southeast Asia’s fast-growing economies are increasingly important growth zones. The company aims to double the number of its stores in Thailand to 320 and possibly venture into Myanmar in the next couple of years.

“Ten years ago, if we looked at a business plan for some of these markets it would have been much smaller than the reality today. Still, Vietnam could prove a tough nut to crack,” Schultz said.

Vietnam’s coffee culture dates back to the 19th century and the country is also taking the lead in coffee production, with its “ca phe chon” (weasel coffee) selling for as much as US$500 per kilo in London and New York.

Source: VOV/The Wall Street Journal

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