news Published on November 5, 2018

Vietnamese coffee needs to be more than just pure and delicious: expert


As coffee has become not just a commercially viable product but also a way of life in Vietnam, producers should make sure they focus on customer experience no less than the drink purity and quality, industry insiders said at an expo in Ho Chi Minh City on Thursday.

The Coffee Expo Vietnam 2018 is ongoing at the Saigon Exhibition Convention Center (SECC) in District 7, Ho Chi Minh City from November 1 to 3.

At the event, Nguyen Phi Van, a local franchise expert, assessed that the business model of coffee is having a large-scale change in the Southeast Asian country.

According to Van, Asian consumers are expecting more from coffee, which was previously regarded as a fast drink that can be served quickly to customers.

“The dynamics of the ‘experience economy’ has made coffee business models change in a way that incorporates lifestyle elements into brands,” said Van.

The ‘experience economy’ is a term arguing that businesses must orchestrate memorable events for their customers, and that memory itself becomes the product – the experience. More experienced businesses can begin charging for the value of the “transformation” that an experience offers.

There have been as many as international and regional brands from South Korea, Hong Kong, Taiwan, and Singapore arriving in Vietnam, mostly competing based on this concept.

They build spaces that serve food in combination with coffee.

In this way, coffee sale currently makes up 50-60 percent of their total revenue while it previously accounted for 60-70 percent.

Meanwhile, food takes a large proportion in the coffee sector, corresponding to 25-40 percent of total revenue.

Convenience store chains also catch up with this ‘experience’ concept as they focus on selling coffee, marking retail participation in the industry.

Another remarkable ‘experience’ move is that coffee is becoming a popular commodity for families as home use that ensures the same quality of coffee as served at stores has also been widely promoted.

At the same time, Vietnamese coffee franchise brands have also set their names in the market with the presence of a number of chains in Vietnam, including Napoli with nearly 3,000 stores, Viva Star with about 160 stores, not to mention The Coffee House, Z! Café.

According to the expert, the strength of coffee must be accompanied by food, a model that has succeeded in many Asian countries.

Van also suggests that Vietnamese startups assert differentiation in design and model, settle in a niche market, or enhance added values such as combining coffee retail systems into automated kiosks at offices, convenience stores.

“Only delicious, pure coffee is not good enough for competition,” the expert concluded.