The stories of big coffee brands in Vietnam

altThe globally well-known coffee brands, one after another, came to Vietnam with the high hope to conquer the market. However, many of them have got disillusioned.

The penetration of the US Starbucks to Vietnam was once the hot topic on local newspapers for a long time. The US giant was welcomed warmly when its first café was opened in the center of HCM City. Vietnamese had to queue up many hours on the opening day just to be able to taste Starbucks’ coffee.

However, things have become quite different. The second shop was poorly patronized on the opening day. The “Starbucks fever” has cooled down quickly.

Gloria Jean’s, who came to Vietnam earlier than Starbucks, has step by step shut down some of its shops in Vietnam after seven years of doing business here.

The stories of big coffee brands

Gloria Jean’s Coffee made presence in Vietnam in 2006 and had had 6 shops in the market by the end of 2011. However, the big guy has not been lucky in doing business in Vietnam. It has even shut down the shop on Dong Khoi Street, a commercial hub in HCM City.

Highlands Coffee, reporting loss, has been struggling to exist by changing its business plan. The firm now offers more choices in the menu, sells vouchers on groupon websites in order to attract more customers instead of only targeting high income earners.

Andrew Nguyen, who brought The Coffee Bean & Tea Leaf brand to Vietnam, once announced an ambitious plan to open 18 shops by the end of 2013. However, to date, only 11 shops have been opened.

Doan Dinh Hoang, a branding expert, who is also the founder of Passio coffee chain, noted that The Coffee Bean & Tea Leaf would bear a hard pressure once Starbucks arrives in Vietnam.

Still harboring the dream of gold

Trung Nguyen has geared up in its plan to expand its business scale with 60 existing shops and the ambition of having 200 in the next two years.

Analysts have commented that Trung Nguyen does not aim to make bigger profits when opening more shops.

Trung Nguyen’s cafes are all located on advantageous positions for which it has to pay high rents. Insiders said each of the cafes needs the investment capital of $300,000-500,000. Meanwhile, the shops are located near each other, which makes it less profitable.

What does Trung Nguyen aim to when it continues opening more shops though the business is not really satisfactory? Analysts have commented that Trung Nguyen tries to increase its presence in the market. However, this will be very costly.

How about Gloria Jean’s Coffee, Highlands Coffee or The Coffee Bean & Tea Leaf? The owners of the brands still keep optimistic about their business, believing that they still have opportunities in the market.

Hoang said the Vietnamese market has just started, therefore, there are still many big opportunities to new brands to join the market.

Andrew Nguyen agrees, saying that there are hundreds of coffee brands in the US which target different groups of customers, from high income earners to popular customers. Meanwhile, the Vietnamese market is still large enough.

He stressed that The Coffee Bean & Tea Leaf still can open 10 cafés a year and that there is no other country in the world where people drink so much coffee like in Vietnam.


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