Which business is leading Vietnam's billion-dollar tea and coffee market?

Vietnam Tea & Coffee: a billion dollar market

Vietnam has a unique and long-standing coffee culture. The habit of drinking coffee every morning has penetrated the consciousness of the majority of the Vietnamese population. Whether free or busy, Vietnamese people still invite each other to “coffee” to start a conversation. The beverage market in general, and the tea and coffee market in particular, has therefore developed quite rapidly.

Outside a Phuc Long store on its opening day. Photo: PV

Euromonitor's research shows that the F&B chain market in Vietnam is worth about 1.3 billion USD/year. However, the penetration rate of F&B chains in the entire market is only 5% because the Vietnamese eating culture mostly prefers small retail stores on the roadside. Spending on drinks served at stores is still low compared to other East Asian countries, creating strong growth opportunities in the future.

(Source: Euromonitor)

Another factor that makes the tea and coffee chain market attractive is that Vietnam has a young population. Generation Z (GenZ) is becoming a large customer group, always wanting to try new and different things. Although it has only been introduced to Vietnam in recent years, milk tea has become a very popular drink among GenZ.

The tea market in Vietnam is expected to be worth 3.1 billion USD by 2022. Photo: PV

Statistics from Momentum Works and qlub show that Vietnamese people spend about 362 million USD (equivalent to about 8,400 billion VND) on drinking milk tea in a year, ranking 3rd in terms of milk tea market size in Southeast Asia. The "bigger piece of cake" is the size of the tea market in Vietnam, with diverse products such as packaged tea, tea bags, seasonal fruit tea... According to statistics from Statista, the size of the tea market in Vietnam is worth 3.1 billion USD in 2022 and is expected to reach approximately 3.7 billion USD in 2025.

This shows that the potential of the Vietnamese F&B market is extremely attractive, attracting a variety of brands to enter the market. According to Euromonitor's estimates, the expected growth of the coffee chain market is up to 15%/year in the period 2022 - 2025. In a large and fiercely competitive market, what is the secret to helping chain coffee and tea brands win and conquer customers?

In the first 9 months of 2022, Phuc Long achieved 1,143 billion VND in revenue. Photo: PV

F&B chain with “farm to store” model

Established in 1968 in Bao Loc tea plateau, Phuc Long began expanding its business in the 1980s by opening its first stores in Ho Chi Minh City, specializing in introducing pure Vietnamese tea and coffee products to domestic and international customers. Phuc Long rose to become a "national" tea brand in the hearts of young people when it decided to open stores to serve office workers who are "savvy" about tea and coffee.

Thanks to its understanding of young people's tastes, Phuc Long has focused on developing high-quality products with a unique tea flavor. "Phuc Long brings a milk tea flavor that no other brand has. Phuc Long milk tea is both rich in milk and rich in tea flavor, without the need for toppings but still makes young people like me fall in love. I have to admit, the company is very diligent in investing in researching new menus. In addition to signature dishes such as oolong milk tea, peach, orange and lemongrass tea..., Phuc Long also regularly launches new, diverse, seasonal dishes... for our group of friends to choose from whenever we gather," said Ms. Ngoc My, a loyal fan of Phuc Long for many years.

Chart of tea market size in Vietnam.

The factors that determine success in the race to conquer users will revolve around the product, the ability to understand customers correctly and quickly, and a consistent customer experience on a large scale. How to create delicious tea and coffee products that match Vietnamese tastes? A representative of Phuc Long said: “The challenge lies in ensuring consistent quality on a large scale at all stages. Phuc Long focuses on all stages, from accompanying farmers, to selecting, harvesting, processing, packaging, and finally brewing at the store, all to bring cups of tea and coffee with the most distinctive and delicious flavors.”

Phuc Long invests in tea hills in Bao Loc and Thai Nguyen, and has long-term cooperation contracts with farmers in famous tea growing regions across the country (Dak Lak, Lam Dong, Thai Nguyen). In parallel with developing raw material supply, Phuc Long has invested in a processing factory in Binh Duong with a capacity of 17,000 tons per year.

Phuc Long is growing stronger and stronger and is leading the market in terms of scale with 860 points of sale. Photo: PV

After being acquired by Masan, Phuc Long has grown stronger and stronger and become the market leader in terms of scale with 860 points of sale, as of the end of the third quarter of 2022. In the first 9 months of 2022, Phuc Long achieved VND 1,143 billion in revenue and VND 199 billion in profit before tax, interest and depreciation..We believe that with Phuc Long's strengths and the abundant potential from Masan, Phuc Long will increasingly reach further and enhance the value of Vietnamese tea and coffee not only in Vietnam but also in the international market.