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Popularity of Coffee Fuels Strong Profits and Rapid Expansion for Coffee Chains in Vietnam

It’s a good time to be a coffee chain owner in Vietnam as the country’s appetite for a cup of Joe has never been more intense.

Vietnam is facing a coffee dilemma at the moment: the Southeast Asian nation’s coffee production in the Central Highlands is facing immense threats from climate change, while in urban areas local coffee shops are on their way to becoming the country’s most popular hangout spots.

A survey by market research company Euromonitor shows that in recent years coffee chains in Vietnam have enjoyed an annual revenue growth rate of 32%, reports VietnamNet. From homegrown favorites such as Phuc Long and Highlands to foreign newcomers like Starbucks and McCafé, coffee franchises are flourishing in the local market.

Doan Dinh Hoang, a branding expert, shared with the online news outlet that there are two main reasons behind this success: firstly, Vietnam's population of 90 million people, 65% of which are youth; and secondly, a love of coffee shops among Vietnamese. Another recent report by marketing academy IAM shows that around 65% of Vietnamese have coffee seven times a week.

On the business side of the equation, a Saigon Café representative told VietnamNet that on average, the company has to shell out VND4-5 billion for a new outlet. However, this overhead investment can quickly be recouped if things run smoothly as profits account for 15-20% of revenue.

Vo Duy Phu, marketing director of The Coffee House, is optimistic about the local coffee market. According to Phu, his chain currently serves around 300,000 customers on a monthly basis; but, this number is expected to increase in the future, prompting more new locations.

Even relative newcomer McCafé, which had just five shops in 2015, expanded to nine in just a year. Meanwhile, American coffee giant Starbucks unveiled its 23rd outlet in Vietnam last November.

[Photo via Vietnam-Navi]

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