Coffee in Vietnam

PROSPECTS

Tendency to socialise in coffee shops and easy access to fresh coffee from street vendors constrain retail coffee from seeing higher growth

Foodservice volume growth of coffee started outpacing that of retail coffee late in the review period, from 2017 onward, as retail coffee has faced strong competition from the rising number of coffee shops and coffee street vendors. Although it is true that the coffee category does not compete directly with coffee shops and coffee street vendors, which offer convenience, it is a fact that the rising number of coffee stores and coffee street vendors have slightly constrained the growth of coffee as such operations, where Vietnamese can buy fresh coffee, are ubiquitous in most neighbourhoods.

Health and wellness and environmental consciousness as well as advertising boosts demand for organic coffee

Organic coffee has become a trend in Vietnam as consumers, especially among those more attuned to gathering information and following environmental, health and wellness trends via the internet and other media. Consumers are also responding to advertisements of organic products, which focus on its positive health and environmental attributes.

As coffee matures, competitors strive to improve brand images and sales by improving their packaging

Confronting the maturity of coffee in the Vietnamese market, competing players strive to improve their brand image and sales by focusing on making their packaging design more attractive and eye-catching. Vietnamese consumers tend to base much of their purchasing decisions on packaging design because attractive packaging implies high product quality and a trustworthy brand.

COMPETITIVE LANDSCAPE

Nestlé Vietnam maintains its lead with popular Nescafé brand

In 2019, Nestlé Vietnam continued to hold the leading value share in coffee thanks to its popular brand Nescafé in various coffee categories – especially instant coffee mixes – and to its strong, ongoing marketing activities in the country. For example, during the review period, the company tried to reach young consumers in a couple of notable ways.

Vinacafe Bien Hoa still struggling to regain former strength

Second-ranked Vinacafe Bien Hoa, which lost its leading position in coffee to Nestlé in 2017, was able maintain but did not improve its value share in 2019. Vinacafe has had difficulty building a stronger brand reputation among Vietnamese consumers.

Larger domestic companies thrive on brand reputation and distribution, while smaller local companies struggle to gain traction

Vinacafe Bien Hoa and domestic companies such as Trung Nguyen in Ho Chi Minh City, which produces, processes and distributes coffee, and Viet Thai International (Highland Coffee), the Hanoi-based Vietnamese coffee chain and producer and distributor of coffee products, continue to dominate coffee sales in Vietnam due to their strong brand reputation and wide distribution network. Small local brands such as Hello 5 and local players in organic coffee are struggling to gain traction, as they mainly target certain consumer groups and, in the latter case, a niche, albeit growing, segment.

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