Featured information about Masan Group and Market

September 05, 2023

Invest in Vietnam’s tea and coffee market

In 2022, among the various industry sectors in Vietnam, the beverage manufacturing industry stood out with the most remarkable growth rate compared to the previous year. Its revenue surged by a substantial 77.5% in the third quarter of 2022 as compared to the same period in 2021. The remarkable performance of the soft drink segment in 2022, which showed growth in both the first and second quarters, deserves special mention. This expansion occurred in both urban and rural areas. The Vietnamese F&B market presents a highly enticing investment opportunity in Vietnam, capturing the attention of both local and international investors alike.

Coffee and tea chains industry in Vietnam

The Vietnamese practice of "going to coffee" has bred a younger coffee culture, therefore it is not inevitable that there are more and more coffee shops on the market. Going for coffee isn't usually identical with drinking coffee, but the phrase "go for coffee" has almost fully replaced dates, difficult phrases, or a quick moment of levity.

Many individuals "go for coffee" to catch up with friends, "go for coffee" to find a spouse, "go for coffee" to decompress after a stressful day, "go for coffee" to watch football, or "go for coffee" just because it's become a habit. Vietnamese people now have a new form of coffee culture known as the "go to coffee" culture.

Vietnam produces a lot of coffee, therefore it is simple to see why most Vietnamese men can drink it and why most of them can't live without it every day. However, there are many aspects of Vietnamese people's coffee habits that cannot be discussed. Hence, vast financial investment in Vietnam has been diverted to develop spots that can satisfy this form of enjoyment for Vietnamese people. Tea and coffee are reportedly significant parts of Vietnamese daily life, according to Kantar Worldpanel's Drink Usage Study for Vietnam in 2022. In urban areas, 21% of consumers drink tea and 18% of consumers drink coffee. 

The F&B industry in Vietnam will earn over 610 trillion VND (18%) more in sales in 2023 than it did it 2018, according to the Food Business Market Survey. The amount of money invested in Vietnam's F&B industry may reach 1 million billion dong by 2026, an increase from the same period in the previous year. In 2022, there will be over 338,600 restaurants in Vietnam, a 39% increase from 2021.

As of March 2023, the 14 most well-known Vietnamese coffee chain businesses operated 1,657 locations, an increase of 133 outlets from the previous year. In addition to Mr., new domestic and international brands have been actively infiltrating the Vietnamese market. Highlands, Trung Nguyen, Phuc Long, and Starbucks are a few examples. In competition for market share are "foreign brands" such Cafe Amazon in Thailand (by the end of 2020), Arabica in Japan (2023), and Rang Rang Coffee (by the end of 2020). The emergence of new brands and the arrival of multinational coffee companies demonstrate how potential the Vietnamese market is and how fiercely competitive the F&B sector is becoming.

According to the British coffee industry research portal Allegra World Coffee Portal, there should be approximately 5,200 sites across all Vietnamese coffee firms by 2025.

Biggest local players

YouNet Media figures show that in the first half of the year, 10 coffee shop chain brands generated more than 699,486 conversations on social media, accounting for more than 76% of all interactions across the entire company. Phuc Long coffee chain is currently one of the leading enterprises in the F&B industry in Vietnam.

Phuc Long, a tea and coffee company founded in 1968, is well-liked among young people. It distinguishes itself with beverages that combine the robust and distinct flavors of tea and coffee with a cutting-edge brewing process. Phuc Long is one of the few Vietnamese beverage chains that drew the interest of Masan Group , which invested heavily in Vietnam by acquiring 85% ownership of the business.

On Le Van Sy, Tran Hung Dao, and Mac Thi Buoi streets in the 1980s, Phuc Long opened three coffee shops. Due to the great success of these coffee shops, the business was incorporated as a limited company in 2000. Phuc Long was successful in part due to the effort made to continuously improve the quality of our products and the quality of the service they provide to their respected customers.

To produce their own high-quality products and meet the rising export demand, Phuc Long purchased a tea hill in Thai Nguyen and invested in the construction of a coffee and tea factory in Binh Duong at the same time.

At the Crescent Mall retail mall in District 7, the first Phuc Long Coffee & Tea establishment opened. The goal of opening this café was to provide clients with the highest-quality freshly brewed and ready-to-serve drinks in a cozy, friendly modern environment. The success of this café signaled a fundamental shift in Phuc Long's trajectory, leading it gradually to become one of the very few Vietnamese companies to compete in the food and beverage sector using a cutting-edge, world-class self-service model.

Phuc Long has achieved the reputation of a pioneer brand with numerous new ideas for the coffee and tea business after 50 years of expertise growing and developing the best quality tea leaves and coffee beans, together with our dedication to offering memorable client experiences.
Phuc Long works tirelessly and passionately to produce the greatest quality tea and coffee products. We are strongly tied to and contribute significantly to Vietnam's long-standing coffee and tea tradition. The success of the first Phuc Long Coffee & Tea shop has resulted in the establishment of more than 60 other locations serving our fresh and tasty beverages throughout Ho Chi Minh City, Binh Duong, Da Nang, Nha Trang, and Ha Noi. They also continue to build and grow the chain stores from the south to the north. Increase product availability across all distribution channels: supermarkets, convenience stores, etc.

From a beverage regarded as the city's "specialty". After a little more than a year of "going home" with Masan, this F&B business has expanded to 27 provinces and cities in Ho Chi Minh City. By the end of 2022, the chain will have 132 flagship locations, which will have more than doubled since Masan acquired it and will dramatically close the gap with other F&B companies.

Foreign coffee chains face difficulties entering the Vietnamese market.

Although the Vietnamese coffee market appears to be very lucrative, global competitors do not easily penetrate it. Many foreign players still struggle to further expand their locations and financial investment in Vietnam’s coffee market. According to a March article in the Nikkei Asia newspaper, local coffee shops in Vietnam protected this $1 billion business due to competitive rates. Following that, the particular flavor and culture of drinking coffee are reasons why Vietnamese people choose to drink Vietnamese coffee.

Iced milk coffee, prepared with filtered coffee and condensed milk and often brewed with the bitter Robusta bean, is one of the most consumed beverages in Vietnam. More than 90% of Vietnam's coffee-growing land is dedicated to producing this kind of bean, which has helped it become the top exporter of coffee in the world.

While this is going on, the majority of Western chains serve Arabica coffee, which has half the caffeine of Robusta and a distinct flavor that is fairly sour and harsh, unlike Vietnamese coffee. Arabica beans, which demand more resources to cultivate and produce than Robusta beans, contribute to the higher price of the drink.

%Arabica, a Japanese coffee firm with over 150 stores in roughly 20 countries, appears to be struggling in the Vietnamese market. Although it first attracted attention for its modest appearance and superb coffee, it was a global success. Observations show that Arabica has not had a positive reaction in Vietnam, nevertheless. There have been accusations that the drinks here are overpriced for the level of service and quality. The least costly beverage on the list is espresso, which costs 65,000 VND for a small glass.

According to Grace Chia, senior analyst at Euromonitor International, Coffee Bean & Tea Leaf is struggling in Vietnam. For local consumers, Coffee Bean is more expensive than Highlands Coffee. However, it doesn't provide seasonal beverages as Starbucks does, and it also takes longer to adjust to unique events in Vietnam.

Despite having more than 30,000 locations worldwide and enjoying global success, Starbucks now holds less than 3% of the Vietnamese coffee market share. Even though coffee is a popular beverage in Vietnam, large corporations like Starbucks struggle to compete with street coffee, popular coffee, or home-brewed coffee. Only 1 Vietnamese out of 1,673,109 drinks Starbucks coffee.

Future trends

This is the conclusion of a study of the Vietnamese culinary business market in the first half of 2023. One of the key components picked by iPOS.vn and revealed in the company's news release is a survey conducted with 137 restaurants/cafés and 200 consumers across the country, primarily in Hanoi and Ho Chi Minh City.

According to the poll, young people frequently spend more money as customers. In particular, up to 47.5% of consumers acknowledged that their spending in the first six months was higher than it was at the same time previous year. This demonstrates that the people with the fastest rate of spending growth are between the ages of 23 and 25.

More than 40% of F&B enterprises anticipate the market to continue giving out positive signals by the end of the year, according to a survey of 137 restaurant/café owners that forecast the business scenario of the F&B industry in the second half of 2023. However, up to 38% of restaurant/café operators believe that competition in the food industry will be greater.

Up to 50% of diners who were questioned said they would maintain current spending levels, and 17.5% said they wished to spend more. Furthermore, 32.5% of consumers predicted that they will cut back on their spending in 2023.

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