By Heneage Mitchell
Vietnam has long had an established coffee shop culture. It produces an abundance of robusta and plenty of arabica, and coffee is an important crop that provides a substantial income for the government. So it is no surprise that coffee drinking is well established.
There is no shortage of local coffee shops in Vietnam. One can find them on almost every street in cities and towns across the country. So Vietnam presents unique challenges to incoming coffee shop franchises. For one thing, the Vietnamese tend to prefer a sweeter, stronger coffee than is typically served in western-style coffee shops. Vietnamese coffees are often flavored during roasting, with butter, sugar or hazelnut, for example. Espresso machines have been relatively rare until now as coffee lovers tend to prefer filtered coffee drinks. In short, the flavor profiles and preparation techniques employed by the majority of Vietnamese coffee shops tends to be radically different to those adopted by western coffee shops and preferred by western customers.
Nonetheless, Vietnamese-owned western-style coffee shops, such as the indigenous Trung Nguyen and Highlands outlets, have now been joined by international offerings from Coffee Bean & Tea Leaf and Australian chain Gloria Jeans.
This writer enjoyed a latte and a tuna sandwich together with local and foreign customers in a Coffee Bean outlet in a shopping mall in downtown Ho Chi Minh just before the Tet holiday last February. Among the customers were a Vietnamese family with several small children and various individuals absorbed in downloading emails on their laptop computers on Wi-Fi. The staff were attentive, spoke sufficient English to take an order accurately and asked if everything was to my satisfaction when I got up to leave. A small blackboard behind the counter had been artistically and chalked with a colorful greeting to a party expected later that afternoon.
This sort of western coffee shop experience is becoming more common as the domestic coffee culture absorbs new ideas and tastes.
Highlands
Local coffee chain Highlands Coffee was established in 1998 selling packaged coffee. In 2002 it opened its first café and now has over 40 coffee shops and counting in Vietnam.
"As a lifestyle brand we believe in serving people rich experiences, based around coffee," according to the company’s website. "Those rich experiences come from doing everything really well. Such as roasting and serving the finest coffee, providing a comfortable and vibrant environment to meet and of course, serving our customers with a smile, warmth and a genuine desire to please. It is our philosophy that makes the difference in how we deliver the experience."
Anyone who has experienced Highlands can testify that the company has met the high standards it set out to achieve.
Highlands serves Vietnamese-style robusta flavored coffees and international espresso style arabica blends. It also offers pastries, sandwiches and other food offerings that one would expect from a western coffee shop chain.
Growing economy
Gloria Jeans opened its first store in Vietnam on December 31, 2006. The master franchise license was awarded to Viet Lifestyle JSC, which is a local F&B operator with much experience in the F&B industry in Vietnam.
"Vietnam is one of the fastest growing economies in Asia, with a population of 80 million and GDP growth at 7%-8% per annum," according to Phi Van Nguyen, Gloria Jeans’ regional marketing manager. "More importantly, it is a very young consumer market with around 60% of the population under 35 years old [TNS data]. With such a young consumer market comes a desire for international brands and products, global concepts and inspiration, especially in the retail and entertainment industries."
Gloria Jeans is beginning to ramp up its investment. Currently there are six stores in Vietnam, but the next five years will see a minimum of 25 new stores being added to the market," according to Phi. "Our primary target segment is young middle management professionals aged 25 to 35 who are global citizens, living in the six key cities of Vietnam," according to Phi. "Gloria Jeans Coffees is positioned as the most fashionable, modern specialty coffee brand in Vietnam and we are well-patronized by celebrities, local and foreign opinion leaders and influencers of the target market. The brand has been perceived as THE place to see and be seen and to show your social status."
Despite its relatively small size, Vietnam is a diverse country with distinct regional differences, and any company setting up shop needs to be able to identify and serve the local market by offering appropriate goods and services,. Coffee shops are o different in this respect.
"Ho Chi Minh customers are easy adopters of global brands and concepts," Phi told us. "They are also people who earn 10 dollars, borrow one more and spend 11. Therefore, frequency of consumption and average checks are always higher in the South. However, Southern customers have very low level of loyalty and are easy to switch brands when there are more choices. Hanoi, on the other hand, is a very conservative market where it takes more time to reach out to local consumers. It is a market where consumers earn 10 dollars, spend one and save nine. However, they are more loyal customers once they adopt the brand."
Espresso focus
"At Gloria Jean’s Coffees, our focus is espresso-based drinks. Therefore, we place importance in the espresso-related equipment," said Phi. "We use top of the line La Marzocco espresso machines and grinders. The rest of the equipment is pretty standard coffee house equipment."
The heart of any coffee shop is to be found beating in the chest of a skilled barista. Gloria Jeans has developed a rigorous training program for its staff to ensure the high quality of the brand is carried forward to customers at every one of its outlets.
"All of our baristas go through an intensive coffee university program, which includes all coffee-related knowledge as well as skills to be able to make a perfect cup of coffee to Gloria Jean’s standard," Phi confided. "The strict standards are shot time from 23 to 27 seconds, milk steamed at the correct foam level and density and temperature and correct weight for each type of coffee drink. For example, a small cappuccino should weight from 220g to 230g while a small latte should be 250g-260g). Every two years, Gloria Jeans Coffees run a global baristas championship with the participation of all global markets. The upcoming championship will be in hold at Disney Land, USA, on October 2010.
Educational process
Gloria Jeans has made some compromises to better serve the domestic market.
"We did launch a local version of hot and cold coffee to cater to local needs," Phi told Tea & Coffee Asia. "Vietnam is a country with an established local coffee culture, having been the second largest robusta coffee producer in the world. Coffee is consumed in four local versions: hot black, hot with condensed milk, cold black, cold with condensed milk. Since Gloria Jeans Coffees is introducing an extensive drink menu of coffee and non-coffee drinks that have never heard of in the market, we familiarize the menu with the above local items using our own arabica coffee bean just to get the customers into the store before starting the educational process of Gloria Jean’s product knowledge."
However, the company has not compromised on the quality of the coffee it serves.
"Gloria Jeans Coffees only roast and sell 100% arabica beans sourced from the top quality arabica beans around the world. Therefore, we are unable to use local coffee for our blends due to quality and availability. As the second largest coffee producer in the world, Vietnam actually produces 98% robusta beans and only 2% low grade arabica beans."
Gloria Jeans Coffees is Rain Forest Alliance certified and has been awarded the Rain Forest Alliance Green Globe Award in 2008.
Vietnamese consumers, as well as visitors to the country, now have the best of both worlds available – from the laid-back, family-run outlets serving local coffee and food favorites to western-style coffee shops serving high quality espresso-based coffee drinks, Vietnam is somewhere no coffee lover need ever be disappointed.