Starbucks entered Vietnam in February 2013, with its first store located at the Phu Dong crossroads in District 1, Ho Chi Minh City. When the brand first appeared, the self-proclaimed “King of Coffee,” Dang Le Nguyen Vu, commented that “they don’t sell coffee, they sell sugary water with a coffee flavor,” and predicted that “in 10 years, at most, they will have developed very well, and I believe they will have over 100 stores at most.”
A decade later, Starbucks Vietnam has proven this prediction somewhat right. But in its 11th year in a market of 100 million people, the company has achieved much more.
11 Years, 110 Stores
When Starbucks arrived in 2023, Vietnam’s coffee industry, with its long-standing tradition, had already seen the participation of numerous domestic and foreign chains and brands, big and small. However, there weren’t many truly dominant brands with international influence. Hence, Starbucks’s entrance brought a fresh breeze and posed challenges.
The first and most crucial challenge was overcoming cultural differences, specifically consumer behavior. Robusta is the preferred coffee variety for Vietnamese due to its characteristic bitter taste, which provides a refreshing and energizing feeling. In contrast, Starbucks coffee is made from Arabica beans, offering a milder taste without harsh bitterness and a distinctive aroma.
Learning from the failures of other foreign coffee chains in Vietnam, Starbucks cautiously adapted its market expansion strategies to align with the local coffee drinking culture.
To address the coffee bean dilemma, Starbucks invested in enhancing the bitterness of its beans. They implemented a strategy of sourcing high-quality beans, carefully roasting and grinding them, while also introducing local coffee culture to the international market.
Since 2015, the Starbucks Reserve Vietnam Da Lat coffee line has been directly sourced from coffee farms in Lac Duong and Cau Dat, bringing the unique flavor of Vietnamese highlands coffee to the world.
Starbucks’s first store in Vietnam, located at Phu Dong crossroads, Ho Chi Minh City. Source: Starbucks Vietnam
As a result, after 11 years in the Vietnamese market, Starbucks now boasts 110 stores and nearly 1,000 employees across various provinces and cities. The brand has captured a significant market share, amounting to approximately 4% in terms of revenue.
In 2019, Starbucks Vietnam’s revenue surpassed 780 billion VND, a more than 32% increase from the previous year, attributed to their accelerated expansion strategy.
In 2021, Starbucks overtook The Coffee House and Phuc Long to become the second-largest coffee chain in Vietnam, generating over 550 billion VND in revenue.
Alongside the strategy of increasing store coverage in the past two years, the chain’s revenue also grew rapidly, by 87% in 2022 and 28% in 2023, surpassing 1,300 billion VND.
However, like other brands, Starbucks Vietnam’s net profit in 2023 was impacted by fluctuations in raw material prices, and the profit margins of new stores remained low.
Ambitious Expansion Plans
Compared to other beverage chains, Starbucks’s store count is modest, ranking behind popular chains such as Highlands, The Coffee House, Phuc Long, and Trung Nguyen Legend. However, reaching 100 stores in Vietnam is considered a success, given that many foreign coffee chains have quietly exited the market, including Gloria Jean’s Coffees, The Coffee Inn, and NYDC Vietnam.
Speaking about their ambitions in this market of 100 million people, Mr. Chris Bates, Starbucks Director for the Asia-Pacific region, shared: “We have reached the milestone of 100 stores in Vietnam after 10 years of presence. I believe Starbucks will continue to thrive in this market. Congratulations to Starbucks Vietnam on reaching 100 stores in 10 years. I am sure that in the next 10 years, there will be hundreds of stores to serve more regions in Vietnam.”
The Evolution of Starbucks: A Tale of Two Cities
Starbucks enthusiasts were saddened by the closure of the Reserve Han Thuyen location on August 26. However, many Starbucks stores in District 1 had ceased operations prior to this, an unfortunate reality for coffee lovers in the area.
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