VCN – The strategy of exporting cheap coffee to compete is no longer appropriate. Coffee growers need to invest to produce high-quality Arabica coffee in order to access the market of trading high-quality coffee for hotels and restaurants in the UK.
|Vietnam's coffee industry must invest in sustainable development to transform itself from the low-end market segment to the high-end market segment in the future. Photo: Nguyễn Thanh|
According to Vietnam Trade in the UK, the UK is a country of tea drinkers but this has changed.
Meanwhile, the consumption rate in the last ten years is increasing, especially among young people. The UK is currently the fifth large coffee consumption market in Europe (after Germany, Italy, France and Spain).
According to the General Department of Vietnam Customs, coffee exports of Vietnam have grown continuously, reaching nearly 40,000 tons with a value of nearly US$62.2 million in 2019. However, exports of coffee to UK in 2020 only reached 27,915 tons (decreasing 43.2%), the value was over US$48 million (decreasing 38.9%) compared to 2019.
The reason for this decline is due to the impact of Covid-19 pandemic and prolonged lockdown policy of the British Government leading to a sharp drop in coffee consumption demand. Besides that, the high sea freight fare from Vietnam to the UK has also resulted in shifting orders to suppliers in South America and Africa by many Vietnamese coffee roasters.
According to Justin Cornelius, Director of Coffee Hub Group, one of the major roasters and coffee distributors in the UK, coffee from Vietnam is mostly low-quality Robusta.
The strategy of exporting cheap coffee to compete is no longer appropriate. Vietnamese coffee growers need to invest in producing high-quality Arabica coffee from smaller-scale growing areas, with better governance, traceability and sustainable development.
If so, Vietnamese businesses will have the opportunity to penetrate the wholesale market of high-quality coffee for hotels and restaurants in the UK.
Vietnamese businesses can also access the sports drinks market with “zero-calorie” drinks made from coffee and the specialty coffee market associated with compelling stories from growing regions with socio-economic factors and special ethnicity.
"Vietnam's coffee industry must invest in sustainable development to transform itself from the low-end market segment to the high-end market segment in the future," Cornelius said.
Mr. Tran Thai, Director of T&T Meridian Company, said: “Coffee companies in the UK know that Vietnam is one of the world's leading exporters of coffee beans. However, in terms of finished coffee brands, Vietnam does not have a prominent position like Italy, France or Switzerland.”
In terms of taste, the British do not drink strong coffee like Vietnamese black coffee. Finished coffee with a strong flavor will be difficult to sell in the UK market.
Regarding packaging, British people have a habit of reading information on the packaging very carefully to determine if a product has allergenic ingredients, how it should be prepared, and meets ESG (environmental, social and governance) or not.
The information should be presented in a scientific and artistic way. Vietnamese coffee brands need to show the "truth-friendly-beauty" criteria on product packaging to attract the attention of consumers as well as distributors.
Marketing and sales is probably the biggest challenge for Vietnamese businesses when the cost of marketing in the UK is quite high. To solve this challenge, Vietnamese businesses need to invest adequately in marketing and hire highly qualified local experts to develop marketing strategies and creative messages that appeal to coffee drinkers.
Research and development (R&D) need to be done by local experts to get the right results and to hit the target.
Mr. Tran Thai noted that Vietnamese businesses needed to show professionalism and goodwill when approaching distributors in the UK. This soft element was very helpful in building trust and laying the groundwork for a long-term relationship in the future.
By Thanh Nguyễn/Thanh Thuy