The instant coffee market share of Vietnam seems to have fixed with Vinacafe holding 50.4 per cent, Nescafe 33.2 per cent and other brands 16.4 per cent, according to some experts. With the country’s total 2,200 tonnes per annum, the market seems to reach saturation but the continual investment in this field by many enterprises has led to a fiercer competition in the market share occupation.
The current coffee market is divided into two separate segments: ground coffee and instant coffee. If the ground coffee doest not come up with tastes of foreigners, the instant coffee has stood firmly on both domestic and overseas markets. The instant coffee sector is regrouped into two: pure instant coffee (with 14 per cent of market share) and “3 in 1” instant coffee (86 per cent). Recently, Vinacafe, which holds the lion’s share of this segment, introduced a “4 in 1” coffee with ingredients of coffee, sugar, powdered milk and ginseng.
Apart from the Vinacafe and Nescafe, aggregately holding 83.6 per cent of the market share, the milk company Vinamilk has recently marketed the Cafe Moment instant coffee. Additionally, Trung Nguyen Coffee, which mainly supplies filter coffee, put G7 instant coffee on the market. This company invests US$10 million to build a production line capable of making 200 tonnes a year. Besides, other firms have contributed some 20 instant coffee brands on the market, which has led to fiercer competition on the Vietnamese market.
The shrinking market share concurs with increasing advertisement activities. The advertisement race was triggered by Trung Nguyen with G7 branded instant coffee. This firm has shocked others as taking other brands to polish itself. Trung Nguyen organised road shows to market its product and show taste comparison between G7 coffee and Nescafe to drinkers. In the meantime, in many recent months, Nescafe introduced three “3 in1” coffee products and changed its advertisement slogans frequently, which was resulted from the feeling of the market share loss to other rivals.
Unsatisfied with a 50-plus per cent market share, Vinacafe decided to introduce a “4 in 1” coffee (added ginseng) in a hope to maintain its sole dominance. Aside from the new product, Vinacafe boosted its advertisement programme “Don’t delay such an ecstasy.” Previously, Vinacafe also had the “Thank you” programme, which allowed consumers to call the Vinacafe directory and win prizes. Consequently, a total of 100,000 phone calls and text messages reached the Vinacafe directory within a month. Vinacafe’s noisy advertisement campaigns helped it maintain its dominance in both domestic and export shares.
The farthest aim of Vietnam is to penetrate into the US and Chinese markets by conquering the retail networks of these countries. To win customers in both markets, Vietnam must satisfy two requirements: big orders and strict quality. Additionally, Vietnamese coffee enterprises continue investing in more constant coffee factories. For example, Vinacafe invested US$20 million to build a modern factory capable of processing 20,000 tonnes a year. This factory is scheduled to begin production by the end of 2006.
Should newcomers invest in instant coffee production when the sales grow slowly while roasted and ground coffee sector still lacked due investment? According to a recent survey by the Taylor Nelson Sofrees Institute, the tendency of consuming instant coffee is on the downtrend in comparison with ground coffee.
Mr Bui Xuan Thoa, Director of Bien Hoa Coffee Joint Stock Company (Vinacafe) said: “Ground coffee producers must change their mind immediately. Instant coffee is in high demand overseas. The production of instant coffee accords with the domestic consumption tendency, financial capacity of domestic enterprises and Vietnamese competitive advantage.” Hence, to produce instant coffee, new small and medium enterprises should grasp full market information to avoid going on the wrong track.
Thi Van
Vietnamese
