Nghiem Ngoc Thuy has been slinging coffees to thirsty Vietnamese for 20 years in her colonial-style villa with peeling shutters, and she and her customers are not too worried that the imminent arrival of US giant Starbucks will alter their time-tested coffee traditions.
Starbucks announced on Thursday that it would open its first cafe in Vietnam early next month in Ho Chi Minh City as part of its strategy to expand across Asia, and plans to add more shops throughout the country.
However, compared with other Asian markets Starbucks has recently entered, the Seattle-based company faces a unique scenario in Vietnam, where French-inspired coffee culture reigns supreme, two homegrown chains have established presences and family-run sidewalk cafes are as ubiquitous as noodle shops.
Photo: AFP
“Our prices are affordable for average Vietnamese,” Thuy said, pausing for just a moment during an afternoon rush at her family-run cafe in Hanoi. “Expensive coffee is just for the children of government officials, or people who have lots of money.”
Vietnamese coffee, made from ballsy robusta beans, packs a stronger caffeine wallop than European-style espresso, which is made from effete arabica. It has a slightly bitter taste that usually is offset by sweetened, condensed milk known to rattle tourists’ eyeballs.
Dang Le Nguyen Vu, whose Trung Nguyen Group owns 55 cafes in Vietnam, said he welcomes Starbucks and does not view the US newcomer as a threat.
“I could imagine Starbucks opening up to a hundred cafes at most in Vietnam in the next 10 years,” Vu said. “But will people in a country with such a low GDP per capita, and a different taste in coffee, really accept Starbucks?”
Unlike China, where tea is the caffeinated drink of choice, Vietnam inherited a coffee culture from French colonizers in the 19th century. Vietnam also is the world’s second-largest exporter of coffee behind Brazil.
According to the government, it produced 1.56 million tonnes of coffee last year, for an export value of US$3.7 billion.
Starbucks already operates more than 3,300 stores across 11 countries in the Asia-Pacific region, and its entry into Vietnam marks the latest salvo in a campaign to woo Asia’s emerging middle classes despite a stagnating US economy.
Jinlong Wang, president of Starbucks Asia-Pacific, said the company plans to expand across Vietnam in a way that celebrates the country’s “coffee culture and heritage.”
“We look forward to growing with Vietnam’s already vibrant coffee industry, and making a positive impact in the communities where we operate,” he said in comments e-mailed to reporters.
Vietnam’s economy has slowed recently in part because of a problematic banking sector, but Starbucks’ upmarket brand will appeal to the growing Vietnamese middle class, said Anthony Emms, managing partner at Stanton Emms Strategy Consultants in Singapore, which advises international food and beverage companies on Asian markets.
“I don’t believe there is a massive barrier to Starbucks in Vietnam,” he said.
More than 60 percent of Vietnam’s population was born after the Vietnam War ended in 1975, and there is a strong demand among youth in Hanoi and Ho Chi Minh City for branded clothing and accessories, no matter that the labels often are fakes, and average annual income is only about US$1,500.
Other international food chains have opened stores in Vietnam in recent years, including the Australian coffee chain Gloria Jean’s Coffees International, the California-based Coffee Bean & Tea Leaf and the American fast-food chains KFC and Burger King. And Nestle instant coffee — engineered to suit the Vietnamese palette — is sold widely in Vietnamese supermarkets.
However, Starbucks would risk alienating some of its potential clients if it did not include Vietnamese drip coffee on its menus in Vietnam, Emms said.
“Say you get a grandfather coming in with a younger relative — he might not want to drink a cafe macchiato or latte,” Emms said.
Starbucks’ announcement that it is moving into Vietnam has been received without much fanfare in local blogs and state-controlled media, although some speculate about how the company will compete with Trung Nguyen Coffee and Highlands Coffee, a homegrown brand that credits Starbucks as an inspiration.
Meanwhile, Nghiem Ngoc Thuy is still swooping across the worn tiled floors of her cafe, setting down steaming coffees just as fresh customers arrive to order more.
At 15,000 dong (US$0.75) per cup, she said on a recent weekday afternoon, as cigarette smoke curled toward the ceiling, 1,000 extra for condensed milk.
Thuy’s family has been in business since the late 1980s, and watched as this leafy neighborhood — called “cafe street” by some locals — has welcomed luxury cars, sushi restaurants and upscale clothing boutiques.
A regular customer, electronics salesman Do Thanh Tung, said he is eager to see if Starbucks coffee really is different from the Vietnamese blends he has been drinking since he was 10 years old.
“Vietnamese young people will welcome Starbucks, once they get used to it,” Tung, now 30, said as he hunched over a silver laptop.
However, he added that he does not expect to become a regular Starbucks patron because he drinks five or six cups of coffee a day, and a latte habit would get expensive.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to