In 2023, Starbucks marked 10 years of operation in Vietnam by opening its 100th location. Starbucks focused on upgrading and bringing a completely new experience space when reopening Starbucks New World - the first Starbucks store in Vietnam.
Starbucks of the US has taken a “cautious and local” approach. So far, the number of stores opened in Southeast Asia’s largest coffee market is considered quite modest compared to other countries. In Singapore, a small market in the region, Starbucks has nearly 150 stores.
Starbucks, despite being in operation for a decade, refuses to say whether it can make a profit doing business in the Vietnamese market.
Meanwhile, other coffee brands such as The Coffee House and Phuc Long Coffee and Tea have attracted young customers with sophisticated tastes. Vietnam's open economy has adopted international trends, such as "third wave" coffee, which focuses on distilling the natural flavors of coffee beans.
Besides, Highlands Coffee, Trung Nguyen Legend, Cong Coffee, Gemini Coffee... are still the most popular brands in Vietnam and it makes it difficult for foreign brands like Starbucks to expand.
Recently, many once-famous brands have been acquired by Vietnamese giants and have been developing continuously. This has also made the domestic-foreign competition in the domestic market more balanced.
In 2021-2022, Masan spent hundreds of millions of USD to own 85% of shares in Phuc Long. Masan's strategy is M&A, large-scale investment to compete with foreign chains.
Masan CEO Danny Le said that the group often looks at strong Vietnamese brands in the market and considers bringing Vietnamese brands to the world. In the tea and coffee sector, Phuc Long is a strong brand like Starbucks that can be brought to the world.
In the processed coffee segment, domestic giants also maintain a strong position. With Vinacafé Biên Hòa (VCF), Masan's surprise M&A of the instant coffee brand with the largest market share in Vietnam in 2011 helped Masan go ahead and hold an overwhelming stake in Vinacafé Biên Hòa compared to foreign investment funds: Hongkong GaoLing Fund (currently holding more than 23%), FTIF - Templeton Frontier Markets Fund (1.6%) and Barca Global Master Fund, LP (1.5%).
The decision to acquire VCF also helps Masan and Trung Nguyen compete fairly with foreign corporations in the Vietnamese processed coffee market.
In China, G7 Trung Nguyen is only behind the three most popular brands in China: Nestle, Starbucks and Saturnbird.
It can be seen that many long-standing Vietnamese brands are weakening in a flat world, under increasingly strong competitive pressure from multinational corporations, even in the domestic market. However, there are brands that continue to grow after being acquired by Vietnamese giants, thanks to good management systems, strong financial potential and extensive sales systems.
Vinacafé Bien Hoa (VCF), Vinh Hao Mineral Water, Vinamilk... are long-standing brands and are still prominent names in the Vietnamese beverage industry, competing strongly in the domestic market and reaching out to many other countries.
Many new products were launched under the leadership of Masan Group, chaired by Mr. Nguyen Dang Quang, as well as entrepreneurs who are eager to build and protect Vietnamese brands, such as Ms. Mai Kieu Lien.
Grow strong when in the hands of Vietnamese tycoon
Vinacafé Bien Hoa Joint Stock Company (VCF) has just released its business plan scenario for 2023. Accordingly, the first instant coffee production enterprise in Southeast Asia is expected to have a maximum net profit of VND500 billion.
This is not a low target in the context of a sharp decline in demand in the domestic and international markets when the economies of most countries are facing many difficulties after the Covid-19 pandemic, the Russia-Ukraine conflict as well as instability in the global banking and financial market. High interest rates also cause difficulties for businesses.
The profit of 500 billion VND is even an impressive figure for a business with a capital scale of less than 266 billion VND and higher than the profit of more than 319 billion VND in the difficult year 2022.
After falling into the hands of billionaire Nguyen Dang Quang's Masan Group (MSN) (Masan indirectly owns 99% of shares), Vinacafé Bien Hoa developed strongly, with profits rising from about 200 billion VND to 320-720 billion VND/year thereafter.
VCF is always the enterprise with the highest earnings per share (EPS) on the stock market and also has a top market price.
Vinacafé Bien Hoa is known as the first instant coffee producer in Southeast Asia, operating since 1968. In the early stages, VCF developed its product portfolio as well as established an extensive distribution system, maintaining the No. 1 market share in the instant coffee industry and the leading position in the branded beverage industry in Vietnam.
In recent years, Vinacafe Bien Hoa (VCF) - a subsidiary of Masan Beverage Company Limited (under Masan Group) has strongly attacked the energy drink sector, competing with Red Bull from Thailand.
After 12 years of joining Masan, VCF has won big with its energy drink line, especially the Night Wolf coffee-flavored energy drink line. Previously, VCF entered this field with the Wake-up 247 energy drink.
The rise of the Wake-up 247 product line has reduced the dominance of Red Bull from Thailand or some other brands such as PepsiCo's Sting and Tan Hiep Phat's Number 1...
In addition, the launch of the “Compact” and “Tiger Stripe” brands also helped Masan strengthen its position in the beverage sector.
In 2017, Vinacafé was recognized as a “Famous Vietnamese Brand”. VCF’s extensive product portfolio includes brands such as Vinacafé, Wake-Up, Café de Nam, Phil, Wake-Up 247 and Kachi.
Across the beverage segment, ready-to-drink packaged tea, carbonates, bottled water, coffee and energy drinks are the products with the largest market share by value. Masan competes in the three largest beverage categories in Vietnam: energy drinks, bottled water and coffee.
Regarding bottled water, according to Masan, this market has a market size of VND6.5 trillion in 2022, and is forecast to grow by double digits in the short and medium term, due to the increasingly declining quality of water sources in some areas, leading to a sharp increase in demand for clean and safe drinking water.
Masan started this industry by acquiring two leading and long-standing bottled water brands in Vietnam: Vinh Hao and Quang Hanh. In addition, over the past 2 years, Masan has built a new premium mineral water product under the brand name “Vivant”.
Regional level, equal to foreign giants
Not only Masan's beverage brands, Vinamilk (VNM) is considered one of the few businesses capable of expanding into the beverage industry (if desired) thanks to its regional management capabilities as well as its leading distribution system in Vietnam.
Under the leadership of famous businesswoman Mai Kieu Lien, Vinamilk is ranked by Brand Finance (the world's leading brand valuation company) as the 6th largest dairy brand in the world, and the most valuable food brand in Vietnam. In 2022, Vinamilk is valued at 2.814 billion USD, an impressive increase of 18% compared to 2021.
In the powdered milk market, Vinamilk's market share is equal to Abbott's (USA), each unit accounts for about 20%.
At Vinamilk's 2023 annual general meeting of shareholders, the company set a revenue target of more than VND 63,000 billion and a profit of more than VND 8,500 billion, determined to transform to overcome the shadow of previous success.
Ms. Mai Kieu Lien said that in the Vietnamese market, VNM has the largest market, competitive advantages, and products spanning most product lines. Vinamilk has long been profitable at its factory in Cambodia. For many years, VNM has exported to China. VNM also has a joint venture with partner Del Monte to produce products suitable for Philippine consumers for export, and when the market is large enough, VNM will build a factory and a cow farm in this country.
Several other Vietnamese beverage companies have also affirmed their position in the domestic market, in their own segments, with many brands becoming familiar to Vietnamese consumers.
Among them, Quang Ngai Sugar is famous for its Dung Quat beer and Vinasoy Vietnamese soy milk products, but also has Thach Bich mineral water products that have achieved national brands. This is also a business that can strongly attack this field.
Trung Nguyen, Vietnam's leading coffee brand, had a difficult time when the couple "Vietnamese coffee king" Dang Le Nguyen Vu and Ms. Le Hoang Diep Thao went through a trillion-dollar divorce.
However, up to this point, Trung Nguyen is still a prominent domestic coffee brand in Vietnam. Meanwhile, Ms. Thao has successfully built the King Coffee brand with a strategy of turning the brand into a symbol. Vietnamese coffee brands compete strongly with foreign giant Nestle.
More than a decade ago, Trung Nguyen began exporting coffee to China and opened the first Trung Nguyen Legend Coffee World model in Shanghai at the end of 2022. According to the CNPP Research Institute, G7 Trung Nguyen is only behind the three most popular brands in China, Nestle, Starbucks and Saturnbird.
Mrs. Thao’s King Coffee also has ambitions to conquer the billion-people Chinese market, starting with its first office in Shenzhen. In recent years, King Coffee has also been present in the US, Korea, China, Singapore, Australia, India, etc.
Not only maintaining Vietnamese brands, Vietnamese entrepreneurs continue to promote the development of valuable assets left by previous generations. Recently, VCF has proposed strategies to promote product innovation. This is identified as the main growth driver, penetrating the Asian market, continuing to maximize the capacity as well as the export production capacity of instant coffee factories to optimize production costs, digital transformation and sustainable development.
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