New race begins in coffee market
VietNamNet Bridge - Vietnamese coffee companies, anticipating big problems in export markets, are focusing on making instant and roasted coffee to sell in the domestic market.

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The participants at a conference on the coffee industry held in HCM City in late December all agreed that Vietnam remains the world’s second largest exporter, but it has lost 4 percent of the market, from 22 percent to 18 percent in the 2014-2015 crop.

The problem is that while other coffee export countries offer products at competitive prices thanks to weak local currencies, Vietnam’s output and quality remains unstable.

IMF predicted that the Robusta price would fall by 10 percent in 2016, while the World Bank (WB) believes the price would decrease by 34 percent in 2016 and drop further in following years.

While coffee exports have decreased, the domestic sales have increased significantly because of the increasingly high demand for roast and instant coffee from young customers. 

While coffee exports have decreased, the domestic sales have increased significantly because of the increasingly high demand for roast and instant coffee from young customers. 

An analyst estimated that if 20 percent of the Vietnamese population drinks a cup of coffee every day, the coffee market would see a growth rate of 15 percent by 2020.

Euromonitor, a market survey firm, estimated that G7, an instant coffee product of Trung Nguyen, alone could bring revenue of VND185 billion.

The firm predicted that retail revenue from instant coffee in Vietnam in 2011-2016 may reach VND2.4-3.6 trillion with annual growth rate of 18.5 percent.

The domestic market, according to analysts, is getting more competitive as big companies have expanded their workshops and launched specific products to conquer niche market segments.

Nestle Vietnam, for example, has inaugurated a factory in Dong Nai province. German Neumann Gruppe is building its second factory in Dong Nai province with investment capital of $12 million. Massimo Zanetti Beverage Group (MZB Group) has opened its first production base in Vietnam in My Phuoc III Industrial Zone in Binh Duong province. 

Meanwhile, Intimex has set up a coffee bean processing plant in My Phuoc II Industrial Zone which has the capacity of 90,000 tons per annum.

Phan Minh Thong, CEO of Phuc Sinh, which exports 50,000 tons of coffee a year, agrees that the domestic market is still large enough for finished coffee products. However, he said it was very difficult to conquer the domestic market, unless producers can provide differentiated products.

Pham Thi Bich Ha, deputy director of Solafood, also thinks the home market is still large for roasted and instant coffee. Meanwhile, Solafood decided to focus on making pure roasted coffee. 

Vinacafe, a big company in the coffee industry, has marketed Vinacafe CHAT, advertised as made of 100 percent first extract of roasted coffee.


DNSG

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