Trung Nguyen Coffee Co aims to build a global brand in the Year of the Snake by expanding its chain of stores into the US market. Viet Nam's biggest chain of coffee houses has also braced for tough competition from world and domestic competitors while targeting an increase in earnings from US$200 million to $1 billion by 2015. Company chairman Dang Le Nguyen Vu spoke to Viet Nam News about the business challenges ahead.
Starbucks Corporation, which is a roaster, marketer and retailer of coffee operating in 60 countries, has opened a store in HCM City. What do you think about competing with this international chain of coffee houses?
|Vu introduces Trung Nguyen products to a shopowner. — File Photo
We had already prepared for this during the past several years, and are not scared by the appearance of Starbucks in Viet Nam. We faced tough competition from Nestle in Viet Nam nine years ago at a time we had only two processing workshops, and we surpassed them with our instant coffee products. I note that the G7 brand is the country's top selling instant coffee in comparison to Nestle's Nescafe.
The Starbucks brand may win over some young Vietnamese people who are fond of foreign trademarks. But we believe that Trung Nguyen Highlands Coffee will still win the heart of domestic consumers with its Vietnamese coffee style. Drinking strong, filtered coffee in the morning has been popular among millions of Vietnamese people since the 19th century.
I can say that Starbucks are not selling coffee. They are selling coffee-flavoured drinks.
This year, Trung Nguyen plans to build its global brand by expanding into the US market, while ASEAN markets will be considered as domestic markets open for further expansion.
How many Trung Nguyen coffee shops have been built in Viet Nam and abroad? How are your coffee shops abroad going?
|Vu shares experience with young students. — File Photo
We have developed 60 luxury shops, of which five were built in Singapore. Meanwhile, a network of tens of thousands of shops providing Trung Nguyen's products was set up nationwide.
Five Trung Nguyen Franchise coffee shops in Singapore are major sites that reflect tastes and reactions to pilot samples that may be sold worldwide.
Trung Nguyen, which was build 16 years ago, needs to work hard to make it a global brand. I always remind our staff how to deal with the three big challenges for success: the product– the successful model – and a successful story.
International brands have seen generations of development with experience and professional management. While we lack these important factors, we have strong finances, marketing, and the Government's prolonged support – to help us succeed in the world market. It means that we have to work our socks off to make it against competition from global firms.
What is Trung Nguyen's strategy for its chain of cafes this year?
We develop our cafes as destination for coffee only – where gastronomers find a space for premium quality coffee. Baristas will make the best fragrant coffee produced from premium Robusta coffee.
Customers can both taste their favourite drink and share in the knowledge and story of our coffee. They can feel and understand how much hard works goes into making good coffee.
It is not simply making a drink, but also the efforts of coffee growers, roasters and bar tenders.
Trung Nguyen will refresh its coffee house chains by introducing cross-cultural coffee styles from Ethiopia, Turkey, Japan, Italy and Viet Nam this year. The new image will see customers become members of a community of coffee connoisseurs. I drink 10 cups of coffee a day.
How is Trung Nguyen faring against tough competition in the market?
Trung Nguyen saw a growth rate of 50 per cent last year. We will restructure our sales and increase new products. Trung Nguyen aims to develop Buon Ma Thuot city as a ‘Kingdom of Coffee'. We aim to dominate the domestic market and improve market share as well as increase coffee consumption in Viet Nam.
We have applied advanced technology in coffee production from Germany and Europe to improve crop processing, packaging and marketing.
Trung Nguyen also plans to buy coffee plants in the US and open coffee houses in Seattle, New York and Boston. It means that the company would sell 15 per cent of its stock to cover the investment in coffee houses in the US.
Trung Nguyen has already exported coffee products to 60 countries. We do hope to reverse our proportion of sales of 70 percent for the domestic market and 30 percent for export in the future.
I estimate that our sales would double due to increasing demand for coffee from China and Southeast Asia. Last year, we earned revenue of $200 million – a 32 per cent increase.
We will also increase the number of coffee houses to 200 during the next two years. We are operating our factories at 110 percent capacity, but we still cannot provide enough to the Chinese market.
What's your big picture dream as chairman of the company?
I hope to build a ‘Kingdom of coffee' in Buon Ma Thuot to help contribute to great growth for the coffee sector in Viet Nam. The country's coffee industry could achieve $20 billion in exports each year and create between 5 to 6 million jobs.
Viet Nam exports 90 per cent of its raw Robusta beans, but there is still no strong brand and this needs to change.
I can make sure that all Trung Nguyen coffee products are produced from guaranteed sustainable development coffee farms. Our company's growth also goes together with ensuring living standard for coffee growers. It's all about creativity with responsibility and harmony and sustainable development. — VNS