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As Starbucks opens its first store in the country in Ho Chi Minh City, and Vietnam becomes its 12th market across the Asia Pacific region, Mintel explores the opportunity of the coffee market in Vietnam and beyond.

Proving Vietnam’s status as the coffee connoisseurs of Asia, new research from Mintel reveals that Vietnam is the leading innovator in “authentic’’ coffee – i.e. ground or whole bean, accounting for around a quarter (23 per cent) of all new products launched in this segment in Asia over the past two years. Indeed, this figure is four times the New Product Development (NPD) from China (accounting for 6 per cent) over the same period.

According to Jonny Forsyth, Mintel’s Global Drinks Analyst, in most markets, consumption of fresh rather than instant coffee is the real test for how developed a coffee market is because of its more complex taste, higher cup cost and less convenient format.

“However Vietnam is a little different in this regard, as it has long held a coffee culture and a sophisticated palate for coffee flavours. Indeed fresh coffee is available on almost every street corner in the entire nation. The litmus test then for Vietnam becomes the continued conversion of these customers to more modern, contemporary, international coffees,” he said.

Accounting for $90 billion in 2008, the coffee market in Vietnam grew to an estimated $147 billion in 2012 and Mintel forecasts this to grow even faster to $213 billion by 2016. In terms of demand, in 2012, Vietnam accounted for a tenth (10.1 per cent) of all coffee launches in Asia Pacific according to Mintel’s Global New Products Database – ranking fourth behind the mature South Korean (15 per cent) and Japanese (13 per cent) markets, as well as India (11 per cent).

“As one of the world’s largest coffee producers, Vietnam’s demographic figures are highly attractive: it has a highly literate, young and well educated population of 89 million with a fast emerging middle class with a thirst for international brands. Indeed, the line-ups at the recent Starbucks opening in the nation attest to the latent demand the market carries for such introductions to the market,” Jonny added.

Across Asia, the focus to date has been on converting a tea drinking continent to coffee. However, while Vietnamese are big tea-drinkers, the challenge to the market is a little different. This is a nation which has been drinking coffee for decades. It has a particularly well-developed coffee shop industry and is the world’s second major coffee producer behind Brazil. Therefore, the challenge will be very different from in other markets: with western coffee chains needing to convince consumers of its authenticity and relevance as a provider of quality coffee and a satisfying in-store experience,” he said.

In terms of coffee consumption in Asia, it is Japan consuming the most – accounting for 2.90 kilogrammes per capita. South Korea follows with 2.42kg, Thailand with 1.95kg and Vietnam (1.15kg) and Malaysia (1.15kg) make up the remaining top five.

“While much of Asia is a blank slate from a coffee perspective, where consumers have had to be introduced to the concept, Vietnamese consumers are familiar with coffee and have their own established tastes and preferences. The key to large international coffee brands maintaining Asian success long-term will be striking the right balance between being flexible enough to lose a little control, while retaining the essence of what makes them such a successful global proposition in the first place,” Jonny concluded.

Headquartered in London, Mintel was founded in 1972 and its geographical reach has extended across the globe with offices in Shanghai, Kuala Lumpur, Singapore, Tokyo, Mumbai, Chicago, New York, Sao Paolo and Sydney.

For 40 years Mintel has led the way as a key partner of many of the world’s most successful companies. It provides clients with insights, inspiration and understanding of key market trends, consumer demand and competitor information.


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