Starbucks is crossing swords with Vietnam’s top coffee company, Trung Nguyen. Starbucks opened its first store in Ho Chi Minh City on Feb. 1 to capitalize on the rapidly expanding Asian coffee market. Meanwhile, its aggressive would-be competitor Trung Nguyen has an eye on Seattle, New York and Boston, according to Bloomberg.
Fueled by a rise in Vietnam’s coffee fortunes, Trung Nguyen wants to surpass the world’s largest coffeehouse brand. It’s a lofty goal, but don’t write them off just yet. Vietnamese coffee could be filling a new coffee niche in the U.S. before you know it.
Agence France-Presse (AFP) shared several interesting aspects of the Vietnamese coffee “takeover” in an April 17 article. Vietnam is the world’s second-largest coffee exporter, and its farmers grow the robusta variety of coffee rather than the arabica beans most U.S. coffee drinkers prefer. Vietnamese coffee is typically brewed slowly in individual cups and mixed with sugar, sweetened milk and ice, according to a Wall Street Journal article.
Vietnamese coffee farmers have leveraged technology — like irrigation methods or checking current coffee prices on their phones before bringing their beans to the market — and their production has skyrocketed, according to AFP:
Vietnamese coffee farmers have changed the global market: if you had a cup this morning, there is a high chance you consumed at least some Vietnamese beans with companies such as Nestle and Britain’s Costa Coffee among major buyers.
In 20 years, Vietnam went from contributing less than 0.1 percent of world production in 1980 to some 13 percent in 2000.
The article then turns to the owner of the coffee chain Trung Nguyen, a man named Le Nguyen Vu whose personality comes through in every quote. Trung Nguyen has 55 stores in Vietnam and exports its coffee to 60 countries. Vu strikes a confident tone in an article in Bloomberg:
“U.S. customers should be able to enjoy cups of authentic coffee,” said Vu, a farmer’s son who founded the company in 1996 and is its sole owner. “Their level of coffee appreciation is probably not high yet, but we’ll work on that.”
Actually, I know several people in the U.S. whose “coffee appreciation” is quite high. Maybe Vu means simply that American consumers haven’t yet developed a taste for robusta coffee? Or maybe he’s just sure of his own success:
“Starbucks no longer has the personality it had when it first started,” Vu said. “That regime will soon end. We are trying to be the one who replaces them.”
With their huge revenues and expansion plans, Starbucks could cause worry among many firms about the competition. This is a challenge, but we should have a strong spirit to compete. It could much be stronger than Vietnamese firms in terms of finance and experience, but it does not mean we don’t have any way to overcome it. We, with just two small workshops, competed well with famous coffee producer Nestle nine years ago.
Interesting fact: One variety of Trung Nguyen coffee is meant to imitate the flavor of beans taken from a kind of rodent (civet) feces, according to the Bloomberg article. That’s one area, at least, where they have an edge on Starbucks.
Video by AFP.