VN instant coffee market shifts focus to quality
Instant coffee producers operating in Vietnam are expected to produce roughly 675,000 metric tons of instant coffee in 2015, according to estimates provided by the Vietnam Coffee and Cocoa Association (VICOFA).
Instant coffee – a small sachet that contains dried coffee powder, sugar and powdered cream – accounts for two-thirds of the global coffee market but the trends are moving towards roasted blends.
“This equates to 14% of the global soluble coffee market,” a representative of VICOFA was recently quoted as saying at a seminar in Hanoi.
The global market is dominated by Nestlé’s Nescafe whose beans are sourced from Vietnam (among other countries) and shipped to more than 40 countries, with the US being its largest market.
However, competition in the industry is brewing as Tata Group based out of India and currently the second largest player in the tea market has announced a foray into the instant coffee market under the brand name Tata Coffee Grand.
In announcing its market entry, Tata Group’s Regional President unveiled the new innovative coffee brand promises to be a ‘best in class’ taste experience, whose beans would be sourced primarily from Tata Coffee’s own plantations in South India.
According to market analysts, instant coffee – a small sachet that contains dried coffee powder, sugar and powdered cream – accounts for two-thirds of the global coffee market but the trends are moving towards roasted blends.
A variety of alternative options, such as ready-to-drink coffee and capsule coffee, are also coaxing consumers away from instant coffee and coffee shops have sprung up everywhere offering freshly brewed coffee and espresso drinks.
Despite the forecast by leading market analysts that the instant coffee market is expected to shrink over the next five years, VICOFA has forecast the market share of producers in Vietnam to percolate annually by 3%.
The VICOFA representative said Vietnam currently is home to 19 coffee processing plants, which have the capacity to produce 75,280 metric tons of instant coffee per year.
However, he made a point of emphasizing the Ministry of Agriculture and Rural Development (MARD) is shifting its focus to updating the domestic industry’s technology in existing plants over the next five years.
"Right now the domestic industry needs to improve its advertising and marketing, rather than construct new plants, which will just result in excess capacity and sit idle if foreign sales cannot be expanded,” he said.
“In lieu of constructing new processing plants, MARD will focus on reengineering the technology development process to increase product quality from now to 2020.”
He said by concentrating on quality Trung Nguyen and Vinacafe – the two leading instant coffee brands in Vietnam – will stand a much better chance of reaching the global platform in the industry.
Trung Nguyen coffee products are easy to find in many foreign markets such as American supermarkets.
However, that does not mean Trung Nguyen has gained significant market share by any measure, because the company’s consumers are mainly Vietnamese or others of Asian origin.
Official statistics show consumption of Trung Nguyen coffee, in particular, in the US is very modest compared to the potentiality of the market. The US market is massive with great demand for instant coffee, which is all imported.