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Vietnamese Cafes Take on Global Giants, Emerge Victorious

When Starbucks first opened its doors in Vietnam in 2013, a slight panic was in the air. From abroad, news outlets wondered whether the global coffee giant could adapt to Vietnam's unique coffee culture; at home, alarmists worried about being taken out by a bigger, stronger outfit, while larger local coffee moguls like Trung Nguyen remained unfazed.

Today, three years since Starbucks cut the ribbon on its very first Vietnamese location, the coffee giant shows no signs of closing down, but Saigon's homegrown coffee culture also poses stiff competition to the international brand, reports the Financial Times.

In fact, the news outlet writes, a quarterly survey by FT Confidential Research polled 1,000 consumers each in ASEAN's five largest economies, with the exception of Singapore, and found Vietnam's response to global chains lackluster. Of the countries surveyed, only Vietnam preferred its own homegrown chains – local outlets like Phuc Long, whose nearly identical logo features a green-and-white color scheme, as well as Trung Nguyen, Highlands Coffee and The Coffee House – to Starbucks.

Thanks to the Seattle-based company's higher price points and western style of coffee, Starbucks has managed to find a foothold in Vietnam's coffee culture but won't be dominating any time soon, according to the news report. Still, upper-middle class Vietnamese view Starbucks coffee as a premium brand.

“While the food and beverage space has become very competitive in Vietnam, Starbucks has a total of 20 stores across Ho Chi Minh City and Hanoi that are doing well,” Alain Cany, country chairman for Hong Kong-based Jardine Matheson, which owns a 50% stake in the company responsible for Starbucks' Vietnam franchise, told the Financial Times. “We plan to have 30 nationwide by the end of the year.”

While the pull of these smaller outlets poses a long-term challenge to international juggernauts like Starbucks, this is a win for Vietnam's independent cafes. Across the region, independent businesses manage not only to hold their own at home but are also beginning to expand elsewhere. Take, for example, Laos' Dao Coffee Shop or Cambodia's Brown Coffee, whose success has grown their businesses to multiple locations and in some cases even multiple cities.

Moving forward, it appears both parties will continue to enjoy success in the Vietnamese market. According to the Financial Times, Vietnam possesses the greatest long-term potential for growth in consumer industries Southeast Asia “thanks to favorable demographics and high per-capita consumption levels”. With this potential in mind, Vietnam's coffee drinkers have a lot to look forward to in the coming years.

[Photo via Phan Mem Tinh Tien

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