Instant coffee market hotter than ever

VietNamNet Bridge – The three big guys Trung Nguyen, Vinacafe Bien Hoa and Nestle are still dominating the instant coffee market, but their affected areas have been narrowed because of the appearance of new brands.

Instant coffee, Vinacafe Bien Hoa, Trung Nguyen

The three big guys have continuously launched new products into the market in an effort to retain their market shares.

Vinacafe Bien Hoa, which felt worried about the low demand earlier this year, has decided to offer higher discounts for retailers and run a series of sale promotion campaigns. It has also marketed two new products Wake-up café Saigon 3in1 and café Phinn instant 2in1.

Café Phinn bas been advertised on 70 TV channels and distributed through modern and traditional markets.

Launching new products into the market is the thing Vinacafe has to do to exist, as its rivals – Trung Nguyen and Nestle – have introduced a lot of new products recently, and many other new rivals have joined the market.

Prior to that, Trung Nguyen marketed a new product – 500 ml bottled fresh coffee, priced at VND27,000. It also advertised G7 X2 as the product with the strong flavor.

Nestle has also targeted the Vietnamese customers who favor strong flavor coffee when launching Café Viet into the market.

A report showed that by 2011, the three big guys Vinacafe, Nestle and Trung Nguyen had made up 82 percent of the instant coffee market. Vinacafe was on the first position with 33 percent of the market share, followed by Nestle with 31 percent and Trung Nguyen 18 percent.

There has been no official report about the 2013 market. However, according to Vinareserach, the online survey community of W&S, Trung Nguyen is the most popularly used brand with 26.3 percent of the market share, while Vinacafe Bien Hoa 22.8 percent and Nestle 21.7 percent.

This means that the three big guys have been staying firmly on their positions, but the cake for them has got smaller because of the appearance of the new brands.

The race of the coffee brands to launch new products and run ad campaigns has forced them to pay more for the sales costs. Vinacafe Bien Hoa, for example, has reported the 89 percent increase in the sales costs and the 25 percent decrease in the 9-month profit in comparison with the last year’s same period.

At the 2013 shareholders’ meeting, Vinacafe Bien Hoa’s Board of Directors said the company invested in the 3,200 tons per annum Long Thanh instant coffee factory. It is clear that for VInacafe, obtaining market share, not profit, is the top priority task.

The Vietnamese instant coffee market is believed to have great potentials. The latest report by Nielsen Vietnam showed that the market value in 2012 increased by 34 percent over 2011, much higher than the 7.9 percent in 2003-2008, according to a survey by Euromonitor.

The market is so attractive that Ajinomoto, which specializes in making seasoning powder, has also attempted to jump on the bandwagon. It marketed Birdy series for women in November 2013 after the unsuccessful Birdy debut in 2008. Analysts believe that Birdy is the redoubtable rival for Trung Nguyen’s Passiona, also for women.

Kim Chi

Instant coffee, Vinacafe Bien Hoa, Trung Nguyen