On the scale expansion trend
According to Euromonitor’s report, by the end of 2022, the coffee chain market in Vietnam reached a scale of about $1 billion per year. At the same time, according to Q&Me’s statistics as of March 2023, the number of stores of 14 prominent coffee chain brands in Vietnam increased by 133, reaching a total of 1,657 stores nationwide compared to 2022.
Andy Nguyen, an expert in the F&B industry, said that in the second half of 2023, major beverage brands continuously introduce new dishes. Small stores follow food trends such as hand-beaten lemon tea, cheese coin cakes, passion fruit tea… The common feature of these products is that they come and go quickly because they are constantly replaced seasonally, and they do not have distinctive features to compete with competitors, aiming to retain customers.
In addition to trend-setting products, many giants in the industry such as Starbucks, Highlands Coffee, Phuc Long, Phê La, and Katinat are expanding their scale and market share from existing resources to implement new campaigns in the past year.
Most recently, Highlands Coffee has started construction of a 500 billion VND coffee roasting factory, Phê La has expanded its branches in Hoi An and Da Nang, Katinat has increased its chain scale to 58 stores. Meanwhile, Trung Nguyen Legend and Cộng cà phê have chosen to “go abroad” with a series of new stores in China, South Korea, and Canada.
According to Ipos.vn, coffee chains such as Phuc Long and Katinat are expanding their presence in Hanoi. In the final stage of 2022 and the beginning of 2023, there was a time when Phuc Long increased the number of sales points close to 1,000.
According to the announcement on the website, Phuc Long currently has 23 flagship stores in the Hanoi market, accounting for 16% of the total flagship stores nationwide. Including integrated kiosks in the Winmart supermarket system, Phuc Long has 137 sales points covering from central to suburban Hanoi.
In addition to Phuc Long, Katinat Saigon Cafe also officially entered the Northern market in April last year with its first two stores in Hanoi.
 Muoi Chu Long Coffee chain in District 1 center. Photo: Hoang An |
A consumer behavior report of Vietnam in 2023 by McKinsey shows that food and drink consumption ranks 4th with a rate of 34% among spending needs (topped by clothing, footwear, and accessories with 56%, followed by skincare cosmetics with 35%).
Hoang Tung, Chairman of F&B Investment, specializing in F&B investment and consulting in Vietnam, assesses that the coffee chain market will see many changes and strong competition in 2024-2025. The recent appearance of Cotti Coffee in Saigon and Hanoi is one example. This is a coffee chain with rapid replication in China and fast coverage in Southeast Asia, of which Vietnam is considered the most important market.
“I personally know some strong coffee chains from China including Luckin Coffee (over 10,000 points) and Lucky Cup (a subsidiary of Mixue, with over 3,000 points) that also have plans to enter the Vietnamese market in the coming years. With a low-price strategy, lean model, fast coverage, and professional supply chain, it is expected that the beverage chain market will face strong competition”, Mr. Tung said.
Who has the stamina to compete with trends?
Small new brands or low-cost franchise brands following trends are not able to maintain heat for long because their products are easily replaced by followers. The market survey of the restaurant business in the first 6 months of 2023 by Ipos.vn recorded salted coffee and passion fruit tea as the two dishes that most businesses added to their menus.
Up to 40.1% of surveyed units have added salted coffee to their menus, even though this drink only made its debut in early April 2023. Next is passion fruit tea, with 34.3% of F&B businesses choosing to add it to their menus. Although it created a buzz on social media, the trend of passion fruit tea and canned chicken salad did not last long. Discussions about these two dishes gradually decreased by the end of June recently.
Sharing with KTSG Online, Mr. Duong Thanh Long, the owner of the Muoi Chu Long Coffee brand, who has been “trending” for the past year, said that customers have been approaching and supporting the brand from the early days through the Tiktok platform. Long said that although salted coffee is the team’s dedication and has debuted successfully, a lot of effort is needed to keep the product from being just a trend for a few months.
“The stability of coffee quality and customer experience, whether new or old, short or long, cannot be ignored. How to improve product quality and service quality every day to bring real value to everyone, I think that is also the only way to retain customers”, he shared.
After a year of explosion in culinary trends, consumer lifestyle is increasingly cared for and improved, people have more choices from different price segments. According to experts, the F&B industry is developing quite similarly to the fast fashion industry, which requires flexibility and constant innovation. This also creates pressure for F&B business owners to constantly create new products. Among them, emphasis is placed on seasonal drink collections, creative packaging for special Tet holidays throughout the year.
For example, the Luckin Coffee chain can create more than 100 new products in 1 year to flexibly change according to customer preferences… Experts believe that this is an opportunity for F&B business organizations that have strong innovative thinking, but it is also a challenge for F&B business people with old thinking and resistance to change.
 The cheap milk tea chain Mixue has nearly 1,000 stores in the market. Photo: Hoang An
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According to Hoang Tung, if investors, coffee shop owners already have a business model or products, they should focus on maintaining and improving them. As we have seen, Chinese beverage chains are very strong in terms of lean models, fast coverage, lead-priced products… Highlands, for example, in Vietnam keeps up with a coffee product priced at only 19,000 VND. This is the way to create a barrier for newcomers and keep existing customers.
“Focus on maintaining a really good product and service experience will be the most proactive direction. The market is competitive, but it is still wide enough to accommodate many different needs. Even in China, where cheap chain brands dominate, high-end brands like Starbucks or Mc Café still exist and develop as usual”, he said.
Hoang An
