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Vietnamese coffee chain may go global

"Our stores in Tokyo are close to other well-known coffee shops, but still people are coming to us even though our coffee is more expensive, because we offer the unique experience of giving people `15 minutes in Vietnam.'"

Dang Le Nguyen Vu, head of Trung Nguyen coffee shops

Starbucks look out. Having taken the local market by storm and dipped its toe in other parts of Asia, Vietnamese coffee chain Trung Nguyen is looking to go global.

The brainchild of medical student-turned-entrepreneur Dang Le Nguyen Vu, thousands of Vietnamese have savoured steaming cups of Trung Nguyen-branded coffee since his first cafe opened in Ho Chi Minh City in October 1998.

But with over 400 franchises stretching the length of the country from the mountainous north to the southern reaches of the Mekong Delta, Vu says his domestic expansion plans are complete for the time being.

"We have saturated the local market and now we want to concentrate on the quality of our coffee and the cafes," he said.

"The key is to invest in the brand and overseas. I want to provide coffee to every person in this world. That is my aim. I realise that it will be difficult but nothing is impossible if you really want it."

Lofty goals indeed, but given the speed with which he has captured the palates of a burgeoning middle-class and navigated his way through Vietnam's stifling bureaucracy, Vu's global ambitions should not be dismissed lightly.

What's more, the 32-year-old is undaunted by going head-to-head with the global giants, led by the Seattle-headquartered Starbucks, and other regional competitors such as Hong Kong's Pacific Coffee Company.

"I don't mind competing against Starbucks, because I don't really have to do so. We are all different companies with different characteristics and there is room for us all in the market."

The chain's first overseas venture was to China's southern Yunnan province, where it opened a branch at the end of last year.

Japan was the next target on Vu's list, and the first of three Trung Nguyen franchises opened in Tokyo in May, operated by Daitsu Inc, a small Japanese coffee retailer.

The cafes have become an instant hit among those wanting to combine their coffee fix with a taste of Vietnamese culture, Vu says, and consequently expansion plans are underway to take Trung Nguyen across the country.

"Our stores in Tokyo are close to other well-known coffee shops, but still people are coming to us even though our coffee is more expensive, because we offer the unique experience of giving people `15 minutes in Vietnam.'"

A branch opened in Singapore in September and Thailand's first Trung Nguyen cafe is to officially welcome customers in Bangkok in November.

Trung Nguyen's exotic blends of Vietnamese beans will be available in Beijing and Shanghai by the end of the year, and Vu says he is also drawing up plans to take his chain to Australia, Canada, South Korea and France.

His roll-out programme took an early tumble in the United States. Vu disovered in May last year that his US partner, Rice Field Corp, had registered the Trung Nguyen brand as its own in October 2000.

Locked in a legal battle ever since, he says he hopes to buy the name back then restart his offensive to secure a niche position in the lucrative US coffee market.

However, Vu admits that to conquer the western coffee-drinking world he needs to find something that rolls off the tongue more easily than Trung Nguyen.

"It is a difficult name to say but we will not create a new name outright. Instead we may add a symbol or shorten it to 'TN' or something like that. We are currently examining all the options."

Vu named the chain after the area where he was born, the Central Highlands. The impoverished region is heavily populated by ethnic minorities but is also home to the country's coffee industry, which has suffered a global slump in prices.

Mountain of beans

Vietnam is the second-largest coffee exporter after Brazil and the world's biggest producer of robusta coffee beans.

Together with three university friends, Vu set up a coffee processing factory in 1996 in their hometown of Buon Ma Thuot, the capital of Dac Lac province, during the last year of his studies.

His companions drifted away to concentrate on their medical careers, but Vu, aware of the enormous potential to tap an abundant supply and Vietnam's coffee-drinking culture, set about spreading the Trung Nguyen name across the country through an ad hoc franchising system.

For a one-off charge and a pledge to buy coffee beans only from his distribution company, a franchisee was allowed to use the brown, yellow, red and cream coffee cup logo, gaining instant status and access to Vietnam's newly-rich.

He refuses to reveal any figures but Vu admits that Trung Nguyen is the leading coffee company in the country in terms of profit and turnover.

Vu says he is now trying to "professionalize" the branches and ensure unity of brand and service to consolidate Trung Nguyen's dominance of the local market, and set up a defensive position should overseas competitors come poaching.

Despite a heavy presence across Asia, neither Starbucks nor any other international coffee chains have set up shop in Vietnam, deterred in part by high tariffs for imported roasted coffee beans.

Should they do so, the mild-mannered Vu will be waiting.
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