A worker prepares a batch for coffee cupping, where recently roasted robusta beans are tasted for quality control, at a coffee processing plant in Ho Chi Minh City.
Vietnam should build special coffee zones that bring out products of high quality and build interesting stories to promote awareness of the nation's coffee the world over, Dang Le Nguyen Vu, chairman of Trung Nguyen Group Corp., Vietnam's biggest coffee retailer, told Vietweek in an interview.
Vietweek: How should we build a brand name for Vietnamese coffee?
Dang Le Nguyen Vu: To successfully build a brand name, we should have good products. We should also promote them in an intelligent manner and build an effective distribution system that facilitates consumers' purchase of the products. These are the three key factors in building brand names. However, the most important is product quality.
Although Vietnam is the second biggest coffee exporter in the world, its coffee is not well known in the world.
True. Although we are a leading coffee exporter, few foreign customers know Vietnamese coffee. Thus, we, in the future, should change the way we promote our coffee. Now, Vietnamese coffee is known only to industry insiders. Many foreign customers enjoy our coffee, but don't know that they are using products of Vietnamese origin, as their brand name has vanished in the intermediate stages. We need to change this.
I have proposed some measures to promote Vietnamese coffee in the world to leaders of relevant ministries and agencies. First we should increase our coffee's quality, which would also help raise the products' export value. Despite big export volumes, coffee export revenues are still moderate. Coffee export value contributed only $3 billion to an economy with a GDP of $100 billion. This is a paradox that requires industry insiders and policy makers to resolve together.
With their huge revenues and expansion plans, Starbucks could cause worry among many firms [in Vietnam]... but we should have a strong spirit to compete
I think we should review our coffee cultivation. The output of our 500,000 hectares of coffee in the Central Highland ranks on top of the world, but it could increase if we apply more advantaged technology in production. The weather in the region is very favorable for growing coffee plants. The application of advanced technology in production could increase output and quality of our coffee, which could help double or even triple farmers' income.
We could learn the way to do it from countries like Indonesia, Colombia and Brazil. They have built special zones for coffee cultivation. The zones account for about 5 percent of their total coffee cultivation area. Products from the zones leave a deep impression on international consumers when they are promoted in the world. Thus, the national coffee industry as a whole benefits from the promotion of the special products.
For example, international consumers may think that Arabica coffee of Colombia is the best in the world. In fact, Arabica coffee of Columbia is not as good as that of Jamaica or Honduras. Only coffee produced in the country's special zones are delicious. However, coffee from the whole of Colombia benefits from the promotion of products from the special zone.
However, Vietnamese firms may find it hard to building brand names because of their limited financial capacity. In fact, many firms have no funds for it, as the cost of advertisement in international media is very high.
The advertising expenditure of some $30 million a year may be very tiny for a big firm with revenues of dozens of billions of dollars like Starbucks. They can build their brand name in an intelligent manner.
Obviously, having no money is a challenge to firms that want to build brand name. However, we have many ways to do it. If we do not have much money, we should have a really interesting story about our coffee to attract international media attention and they would bring it freely to international customers.
We export coffee to 80 countries and regions, so we should require importers to provide geographic indication and origin information of our products when distributing them. Now, intermediaries often ignore this information when distributing Vietnamese coffee. Thus, international consumers use Vietnamese products, but do not know it.
With current developments like the Internet, it is not necessary to promote our coffee via costly traditional channels like advertising services of CNN and the Wall Street Journal.
Vietnamese firms, even the whole coffee industry, would not have enough funds to promote their products. Thus, we have to think of other ways to do it intelligently. As I said earlier, we should have interesting stories about our coffee that attracts international media attention.
You have said you plan to build a coffee museum in the Central Highlands. Is this a way to build a story about Vietnamese coffee?
If international media announce that Vietnam's Buon Ma Thuot is a city of coffee, it would amaze billions of coffee consumers in the world. This is very important because it could create an impression about Vietnamese coffee in the minds of international consumers. The construction of the coffee museum is one of the works to implement the idea.
However, we now should review what we have, what we don't have to develop the idea. We should demonstrate to the world's consumers that our coffee is really attractive. I think this is most important.
Should we be concerned about the entry into the local market of many big coffee brand names like Starbucks?
No, we shouldn't. Before Starbucks, many international coffee brand names like Coffee Beans and Gloria Beans have entered Vietnam. With their huge revenues and expansion plans, Starbucks could cause worry among many firms about the competition. This is a challenge, but we should have a strong spirit to compete. It could much be stronger than Vietnamese firms in terms of finance and experience, but it does not mean we don't have any way to overcome it. We, with just two small workshops, competed well with famous coffee producer Nestle nine years ago.
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