Vietnam Coffee Market, Whose Opportunity?

27 Sep 2018

Dominated by three old names 

With convenient advantages, easy to mix but still aromatic, instant coffee is now the choice of many Vietnamese. Not only winning the hearts of domestic consumers, instant coffee is considered a special item indispensable in the list of gifts for overseas Vietnamese and international friends when coming to Vietnam.


Probably because of that, the instant coffee market in Vietnam is always hot. The beverage-food industry businesses all want to grab the market pie.


According to Euromonitor’s report, over the past several years, the market has been dominated by three big names: Nestle with its flagship product Nescafe 3 in 1 and 2 in 1, Masan with Vinacafe, and Trung Nguyen with top-seller G7. The total market share of these old brands account for more than 80 per cent of the market.


In the export market, the report of economic analysis and forecast information Focus Economics also says that demand for instant coffee in the world is constantly increasing, especially in countries such as China, India and the U.S. And this is a great opportunity for Vietnam, whose Robusta coffee (raw materials to make instant coffee) is ranked as the best or the second best in the world.


Therefore, the market is not “quiet”. In the last three years, a number of rivals such as TNI (King coffee), Ajinomoto (Birdy), PhinDeli have entered the market. In fact, up to this point, these new brands have not made a distinct difference compared to the big three.


Latecomers see big opportunity 

The instant coffee production is expected to continue to increase in the coming time, as the orientation of the State is stepping up processing to improve the value of coffee beans.


According to the Department for Agro-forestry, Fisheries and Salt Production (Ministry of Agriculture and Rural Development -MARD), the ministry has chosen to develop instant coffee significantly in the coming time. According to MARD’s target, by 2020, 25 per cent of coffee bean output and more will be processed into products for direct consumption. In particular, the production of roasted coffee will be 50,000 tonnes per year, instant coffee will reach 255,000 tonnes per year. By 2030, the production of instant coffee will increase to 350,000 tonnes per year.


Not only the domestic demand but also the export of Vietnam’s instant coffee is growing very positively. Vietnam's instant coffee has already been available in 70 countries and regions around the world. According to the Vietnam Coffee - Cocoa Association, Vietnam's coffee exports have increased by an average of 5.5 per cent annually over the past 15 years. In the fiscal year 2016/2017, the export of instant coffee was three times that of last year, reaching 1.97 million bags.


The instant coffee export in the 2017/2018 season is forecast to increase by 100,000 bags, reaching 2.1 million bags, because the companies, whose main export market is China, are receiving great investment capital.


Market opportunities for "convenient coffee" has attracted NutiFood, the enterprise has strength in nutritious dairy products. In 2017, NutiFood affirmed its participation in the coffee market by investing VND1,000 billion in the coffee kingdom of Dak Lak. It became a strategic shareholder of Phuoc An Coffee Company, whose export turnover is averagely US$12-15 million annually, owning 1,000 hectares of coffee - the former French legendary CADA farm known for the best quality Robusta coffee beans. This dairy enterprise wants to find a firm foothold in the domestic instant coffee market and exports products to Japanese and US markets.


After nearly two years since that “handshake”, NutiFood has successfully researched Nuticafe Iced Coffee with Milk - a product with flavour and taste similar to roasted coffee mixed with condensed milk- to meet the domestic demands of popular iced coffee with milk, and also the famous drink in the world voted by many international travel sites.

Mr Tran Thanh Hai, Chairman of NutiFood is not afraid of being a latecomer when the market is nearly shaped. He is confident with the difference of NutiFood Coffee because NutiFood has its own technology of "packing" the cup Vietnamese coffee ice cream with extraction technology, cold concentration of fresh iced coffee Ice Flash, to make 3 in 1 instant coffee, but keeping the same flavour as roasted filter coffee with sweetened condensed milk.


NutiFood expressed the desire to please customers using roasted coffee by "Nuticafe fresh iced coffee with milk" because of its convenience and right taste; and at the same time to access international customers in Vietnam and abroad. 


The goal that NutiFood set out at the beginning was the appearance of Nuticafé fresh iced coffee with milk at points of sale, from supermarket channels to conventional grocery stores, making it easy for consumers to find and buy this product. Moreover, Nuticafé wants to become a representative of Vietnamese coffee, bringing Vietnamese instant coffee to the world, so that international friends all over the world can enjoy it.


According to MARD, Vietnam now has 20 factories processing pure instant coffee, mixed instant coffee, with a capacity of 75,280 tonnes per year. The majority of instant coffee production is exported abroad. Many products are popular worldwide and sold in the Walmart system in Chile, Brazil, Mexico and China. The potential for exporting this item of Vietnam is huge thanks to its abundant raw materials. In addition, instant coffee is popular in the domestic market, because it is easy to use, convenient and suitable for modern life. 


Source: VCCI News


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