What has Trung Nguyen achieved in the US?
What has Trung Nguyen achieved in the US?
When Starbucks entered Vietnam, CEO of Trung Nguyen Coffee spoke scornfully of the American coffee brand, so people have asked: what has Trung Nguyen done in the "homeland" of Starbucks?
Trung Nguyen is one of the leading coffee brands in Vietnam. In the fiercely competitive environment like Vietnam, where there are many big names like Nestle and Masan, sometimes losing market share, Trung Nguyen has retained its position.
However, Vietnam is not the goal of CEO Dang Le Nguyen Vu. Vu always wants to turn Asia into Trung Nguyen’s “local market”, with Singapore the central platform to launch Trung Nguyen coffee to the world. And like so many other commodities, the US market is a "dream" destination of Trung Nguyen.
A long time before Starbucks entered Vietnam, Trung Nguyen made the first steps in America.
During survey trips to the US, brand expert Vo Van Quang realized that products of Trung Nguyen and Vinacafe were sold at any Vietnamese and Asian stores. The most popular products of Trung Nguyen in this market are Trung Nguyen coffee powder and instant coffee G7. Quang said Trung Nguyen has taken steady steps in America, thanks to the assistance of its American distributors.
Trung Nguyen coffee products are easy to find in American supermarkets. However, that does not mean Trung Nguyen has gained significant market share there, because Trung Nguyen consumers are mainly Vietnam and people of Asian origin.
Statistics show that consumption of Trung Nguyen coffee in the US is very modest compared to the potential market. The US market is large with great demand for coffee, which is all imported.
The demand for coffee in the US is relatively stable, about 1 million tons per year. All Vietnamese coffee brands in the US account for about 10% to 15% of the volume and less than 6% of the value. In particular, Trung Nguyen does not have a large market share, with annual modest export volume. In 2011, 1,400 tons of Trung Nguyen coffee were exported to the US. In 2012, the figure slightly increased to 1,600 tons, mainly raw coffee.
In America, Trung Nguyen has to compete with not only Vietnamese coffee brands but also many American coffee brands. According to a survey by the American Coffee Association, local consumers favor Arabica coffee. Up to 70% of the coffee consumed in the US is Arabica, imported from Colombia, Brazil, and Mexico. The 30% remaining Robusta coffee is imported from Vietnam and Indonesia.
The US market is extremely difficult with strict regulations on tariffs and rules, so Trung Nguyen’s development strategy in this market is a franchising model.
Franchising can be a wise choice of Trung Nguyen, but the company will have to solve many problems, and the biggest one is direct confrontation with Starbucks.
